Fuel levy will have a 'deep impact', says AA

2019-02-20 20:25

The Automobile Association has expressed relief that Finance Minister Tito Mboweni did not increase fuel levies above inflation, as has been the case in previous years - saying the increases to the fuel levies will already have a "deep impact" in the months ahead.

Consumers currently pay R5.34 towards indirect taxes on every litre of petrol bought, and R5.19 on every litre of diesel.

This is comprised of R3.37 (petrol) and R3.22 (diesel) for the General Fuel Levy, R1.93 for the RAF levy (for petrol and diesel) and four cents for customs and excise taxes (petrol and diesel).

With the increases announced in Budget 2019, these levies will now rise by a combined 29 cents for petrol and 30 cents for diesel, which will include a nine and ten cent addition for the Carbon Tax on petrol and diesel respectively.
 
From April, the total cost of the levies (General Fuel, RAF, customs and excise, and the new Carbon Tax) will amount to R5.63 for petrol and R5.49 for diesel.

Carbon tax on 'inferior' fuel

Of particular worry to the association is the inclusion of the new Carbon Tax announced by Mboweni.  
 
"Besides being an additional line of tax on the fuel price, the inclusion of a Carbon Tax is grossly unfair by government, given the fact that South Africans will now be paying an emissions tax on inferior quality fuel, despite not having access to higher quality fuels which are available in many other markets in the world," the AA said.

Against this backdrop, the AA says the increases to the fuel levies will have a deep impact on the fuel price for the months ahead, placing consumers on the back foot before any price adjustments for the rest of the year are even made.  
 
Another factor the AA believes is important is that any increases to the fuel price will come when government is appealing to citizens to tighten their belts.
 
"Setting an example in this regard may prove more successful in the short and longer terms than simply adding yet another layer to taxes," said the AA.

The National Association of Automobile Manufacturers of South Africa (Naamsa) noted that Budget 2019 contained no major tax shocks, with excise duty increases on a variety of products, and fuel taxes rising at a rate below inflation.

Naamsa has taken note of National Treasury's proposal to align the tax treatment, for ad valorem customs and excise duty purposes, between imported and locally manufactured vehicles.

Overall, it regards the Budget proposals as pragmatic and sensible, with a distinct growth enhancement focus.