Raise fuel levies? Don't do it minister, pleads AA

The Automobile Association (AA) has a simple message regarding increasing fuel levies ahead of finance minister Tito Mboweni’s 2020 budget presentation in parliament on Wednesday: don’t do it.

“The minister will have to walk a trickier fiscal tightrope than many of his predecessors, and he will undoubtedly be seeking relief from different quarters to ease the country’s financial burden. This places him in a tough position where he will have to meet the needs of the country while at the same time ensuring there is enough money coming into government coffers to satisfy demand,” the AA says.

However, the association says, turning to the fuel levies as a source of revenue will be a dangerous and ultimately damaging tactic, especially for the poor.

“Previous years have seen higher than inflation increases to the fuel levies – the general fuel levy, the Road Accident Fund levy, customs and excise taxes and the carbon tax. However, given the fact that many South Africans are buckling under severe financial constraints such an increase this year will be more than detrimental, it could be catastrophic,” notes the association.

The two major taxes – the general fuel and Road Accident Fund levies – comprise around 40% of every litre of fuel sold in the country. Currently these taxes amount to R5.59 on every litre of petrol (GFL = R3.61 and RAF = 1.98), and R5.47 on every litre of diesel (GFL = R3.47 and RAF = R1.98). Neighbouring countries which buy fuel directly from South Africa do not add these taxes, making their fuels cheaper than in the country which supplies them.

Any increases announced by the minister on Wednesday would come into effect in April.

“We have seen in the past that any increases to the fuel levies is met with a swift increase to public transport fares, including those of taxis. While a slight increase, even one in line with inflation, may not seem drastic, it has an enormous impact on the lives of consumers who rely on every cent to make it to the end of each month. These increases are therefore extremely harmful to the majority of citizens and should be considered an absolute last resort by the finance minister,” says the AA.

Gauteng motorists are also eagerly waiting to hear whether Mboweni will announce the scrapping of e-tolls in his budget presentation, although he previously stated the controversial road-funding is here to stay. In his mid-term budget last October, the minister mentioned the government had considered several options but decided to retain the user-pays principle.