EDITOR – In response to the letter from Sicario – “Understanding How The Fuel Price Is Set” (Berea Mail 5 February 2016) – there are a few facts that are questionable.
There is an interesting article (https://www.fin24.com/Budget/Motorists-to-cough-up-R17bn-extra-as-Nene-milks-fuel-levy-20150226) which states that the then minister of finance, Nene (yup, we have been through a few since then), used the halving of the crude oil price to raise the tax take on fuel to 41 per cent. This, apparently, is in line with the tax on fuel in first world countries.
The fuel levy is apparently open to be used (and abused) for general national funding.
The point of this letter is not to question Sicario’s letter though. The impact of this fuel levy is huge and we need to highlight this. The production and supply model for basic foods, bread and milk, is impacted from supply to the farms, farming, transport to the mills and dairies, processing of the raw product into consumable product and transporting to the retailer. Every role player in that cycle builds in transport costs including fuel.
Add to this the fact that our national road structure is nowhere near that of a first world country. This means that all those role players will build in additional vehicle maintenance and insurance costs into their pricing to cover vehicle damage, theft, etc. This further increases costs through the supply cycle. Then, add the infamous e-toll costs onto this and we are looking at hyper-inflation.
It would be naive and idealistic to believe that all the role players in the supply cycle would reduce their prices if the fuel price was reduced. However, if we could reduce the price of a loaf of bread by R1 and a litre of milk by R1, how many more starving, unemployed people could be fed?
R1 might seem insignificant to those that have the education and privilege to read your newspaper but there are a lot of casual labourers and unemployed people out there begging for work, at ridiculously low daily wages, just to feed their families. With the expected price increases in basic foods due to the drought, every cent is critical for these people.
A labourer taking a taxi from Mariannhill to Durban would have paid R10 one way this time last year. The current fare is R13 one way. That is a 30 per cent increase.
Ultimately, if we want to see a turnaround in our country and economy, we need to question and, where necessary, oppose undue taxation and the reckless spending of those taxes. The fuel levy is a good place to start.
Don Hastings
Durban
