Bigger fuel levies, smaller transport spend worry AA

The Automobile Association (AA) said, while it welcomed the decision not to increase value added tax (VAT), it was dismayed at the increases to the general fuel and Road Accident Fund levies.

The increases were announced by Finance Minister Tito Mboweni in his budget speech yesterday.

The minister announced a combined 25 cent increase to the two main fuel levies: 16c will be added to the general fuel levy, bringing it to R3.63 on every litre of fuel, and 9c will be added to the Road Accident Fund levy, bringing it to R2.07 on every litre. This means citizens will pay R5.70 towards these two taxes alone – or around 35% to 40% of the price of every litre of fuel.

“We acknowledge that revenue must be collected towards the fiscus and the difficult decisions the minister had to make in preparing this budget.

“However, as we pointed out earlier, the increases to the fuel levies will hurt the poorest of the poor hardest and will make transport costs that much more expensive for many who rely on transport daily to earn a living,” said AA spokesperson Layton Beard.

Another area of concern for the AA was the reduction in spending on transport, particularly public transport, which would decrease by R13.2 billion over the next three years.

“Access to public transport is access to a job, education, healthcare and so many other critical services,” Beard said.

“To reduce spending on public transport – which is already inefficient and unreliable – will make it even harder for many to improve their lives.

“Curiously, this comes at a time when our country is experiencing its highest unemployment rate ever.

“In our view spending on public transport should have increased considerably, not decreased.”

The AA said, apart from the increases, the fact the Road Accident Fund levy was again increasing and would benefit by more than R2 on every litre of petrol was out of kilter with the message of curbing government expenditure.

The increases come into effect in April. Any levy adjustments are implemented annually and do not influence or account for any fluctuations to the price of fuel, which is adjusted monthly.

“The combination of reduced spending on public transport and increases to the fuel levies, is sending a mixed signal to the population on government efforts to create jobs and improve access to healthcare and education,” Beard said.

“Transport is a critical component of our economy and should enjoy priority in fiscal allocations. These steps seem to indicate government is of a different view.”

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