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Finance minister Pravin Gordhan on Wednesday announced that an additional 30 cents per litre is to be added to the general fuel levy for the second year in a row.
The minister said that an additional nine cents a litre is to be added to the Road Accident Fund (RAF) levy, which is cause for great concern, according to the Automobile Association (AA).
The AA said the additional 30 cents per litre means that motorists will now be paying R3.15 towards the fuel levy for every litre of fuel they put in their vehicles, and additional R1.63 per litre for the RAF levy.
“Effectively this means that for every litre of petrol, motorists are paying R4.78, or 35 percent, on indirect taxes. This is a huge amount, and calculated on a 50 litre tank of fuel amounts to R239.
“South Africans already buckling because of the weak economy will now have dig even deeper in their pockets. This at a time when many are questioning government spending,” the AA said.
Using the current price of a litre of 93 unleaded fuel of R13.38 inland, and R13.00 at the coast, the increases will push the price to R13.77 per litre, and R13.39 per litre, the association said.
This, of course, is dependent on the monthly changes to the fuel price. “However, using the current figures, filling a 50 litre tank of petrol will cost R688.50 (inland), and R669.50 at the coast,” the AA said.
The Association noted this increase comes amid widespread apathy towards other taxes on motorists, for instance, the funding model of the Gauteng Freeway Improvement Project (GFIP).
“We have long called for a portion of this fuel levy to be ring-fenced and used for projects such as Gauteng’s e-tolls. But the money collected through this levy does not go towards this, although it makes sense to do so. Instead motorists must pay extra taxes for the use of the roads,” the AA noted.
“Motorists remain easy targets for revenue collection although many are suffering as a result of increases to the fuel price. This is particularly prejudicial to motorists especially in the context of a lack of proper, reliable public transport,” the association said.
“Hundreds of thousands of commuters rely on their vehicles to get to and from work daily. And, these increases will not only impact on transport costs – including things such as bus and taxi fares – but are also putting inflationary pressure on other commodities that rely on road transport to be delivered across the country,” the AA said.
Patricia Williams, tax partner at Bowmans, pointed out that the Budget Review 2017 proposes that, in the 2018/19 period, the VAT zero-rating on fuel be removed. It goes on to state that, to mitigate the effect on transport costs, the fuel levy may either be frozen or decreased.
“If indeed this is only a freezing of the fuel levy, the removal of the zero-rating of fuel would result in a 14% increase in the price of fuel to consumers,” the tax specialist said.
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