Johannesburg - As South Africans brace themselves for the Budget Speech on 23 February, the Automobile Association has urged the Minister of Finance to avoid increasing the fuel levies and called for a review of the fuel pricing structure.
The price of petrol has risen by R4.45 in the last year alone, with a litre of 95 unleaded petrol currently costing R19.42 at the coast and R20.14 in the inland regions, while 93 unleaded retails for R19.89.
Although constantly rising international oil prices are mostly to blame for the recent increases, the current fuel taxes - which amount to R6.11 per litre of fuel - are aggravating the situation and any increase to these levies will hit the poor hardest.
“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,” the AA said.
“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.”
The General Fuel Levy (GFL) currently stands at R3.93 per litre and the Road Accident Fund (RAF) levy at R2.18 per litre. According to The Organisation Undoing Tax Abuse (OUTA), the fuel levy increased by 116% between 2011 and 2021, while the RAF contribution increased by 173%.
Adding insult to injury is that many neighbouring countries that buy fuel from South Africa don’t have such taxes, making their fuel cheaper.
“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,” the AA said.
“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.”
The association has set up an online petition, urging the Minister to implement a fuel price review.
“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,” the AA said.