Cosatu wants cap on fuel prices to protect motorists

Fuel price drops will be a welcome relief for consumers.

Meanwhile, economist Dawie Roodt said a fuel levy cap would be easy to implement, but added it was not the best of choices.

The department of energy is conducting ongoing research over the feasibility of a fuel price cap to protect motorists from unpredictable fuel prices.

The Congress of South African Trade Unions (Cosatu) approached the department to assist with the 20% spent on fuel from motorists’ income.

Cosatu spokesperson Sizwe Pamla explained the anticipated fuel cap was expected to protect motorists from yo-yo fuel prices and allow them to budget for fuel.

“The department of energy was expected to conclude whether the fuel cap would be realistic, beneficial and feasible to motorists,” Pamla said.

An expected drop in fuel price will be welcomed by financially stressed South Africans.

Economist Dawie Roodt explained a fuel cap would be an easy thing to implement but said it was not the best of choices.

“The fuel levy cap is easy to do but the minister of finance would lose a very important revenue source over time because the fuel levy is one of the small taxes, but it is an important tax,” Roodt said.

He thought it was not sensible for the minister to cut the public servants wage bill, but should rather increase taxes.

He explained the fuel levy was a broad-based and relatively cheap tax to collect.

“It would be wise to increase the fuel levy even more,” he suggested. “All taxes are bad but the fuel levy is one of the least bad taxes – it is broad-based, it is indirect and it is relatively cheap to collect.”

In his budget speech last week, Finance Minister Tito Mboweni said the fuel levies would increase by 25c/l, of which 16 cents would go to the general fuel levy and 9 cents to the Road Accident Fund.

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