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Association says increasing levies is not the answer – renews calls for review of pricing model
Government must act quickly to deal more effectively with the fuel price in South Africa. This is the view of the Automobile Association (AA) which says government must find ways to mitigate against rising fuel costs which are negatively impacting on all consumers in the country. The AA says one way to do this is through a review of the current fuel pricing model.
“Our economy is closely linked to the fuel price; it is a major input cost in the manufacturing, retailing and agricultural sectors. We have noted before that a review of the current structure of the fuel price, as well as an audit of all the elements which comprise the fuel price, should be done sooner rather than later. We therefore call on the Minister of Finance to initiate such a review during his Budget Speech on 23 February,” says the AA.
In addition, the Association again urges the Minister not to increase the fuel levies which are part of the fuel price.
“We know all too well of the economic challenges facing the country, and of the importance of the revenue raised through the two main levies. We are also aware that, as was the case last year, delivering a Budget in the current economic environment is tricky and difficult and that the pressure to ease government’s financial burden is immense. However, increasing the levels of the General Fuel and Road Accident levies will be counter-productive as this will impact mostly on the poorest of the poor,” says the Association.
The General Fuel Levy is currently pegged at R3.93 per litre (up from R3.77 in 2021) and the RAF levy at R2.18 per litres (up from R2.07 in 2021). Combined they add R6.11 to every litre of petrol and diesel sold in the country. Any adjustments announced by the Minister in the February Budget Speech are implemented annually in April.
Neighbouring countries who buy fuel directly from South Africa do not add these taxes to their fuel pricing, making their fuels cheaper than it is in the country which supplies them.
2021 saw fuel prices reach record levels and they are again touching those levels despite a decrease to fuel prices in January. The Association says any adjustments to the collection rates of these levies will have severe consequences for consumers and they should not be altered.
“Our country faces enormous and complex economic challenges. High fuel prices are adding to these challenges and instead of accepting the current model, we must seek solutions that benefit consumers, not place them in more financial distress. One immediate solution for us, for instance, is to review the funding of the poorly managed Road Accident Fund (RAF). Our reliance on the RAF is a direct result of South Africa’s poor road safety and that’s where more attention needs to be given for a long-term solution,” urges the AA.
Signatures from the AA’s petition calling on the Minister to #ReviewTheFuel in his Budget Speech next Wednesday will be submitted along with a letter from Association expressing its views on the levies and calling on him to initiate the fuel review. Citizens can add their voice to the petition by visiting https://aa.co.za/stage/review-the-fuel/.
The Association it says it will also highlight that any tax increases will be viewed in the context of current spending, corruption, increases to utility fees, and increases to living costs, all at a time when more people than ever are unemployed in the country.
“We must accept that drastic intervention is needed if we are to grow our economy; one way we believe this can be done is by dealing more effectively with the fuel price than what we currently are,” the AA concludes.
