As South Africa prepares to deal with another fuel levy – carbon tax – economists say fuel price increases will continue because the government “needs money desperately”.
The new carbon tax, which promotes the “polluter-pays principle”, was announced in Finance Minister Tito Mboweni’s budget speech. He said it would deal with the damage caused by high carbon emissions and encourage low-carbon options.
The carbon tax will come into effect on June 1 and go through two phases, from 2019-2022 and from 2023-2030.
Companies, individuals and public entities will be liable for emitting greenhouses gases over the prescribed threshold, including carbon dioxide, methane, nitrous oxide, perfluorocarbons, hydrofluorocarbons and sulphur hexafluoride.
The Automobile Association said implementing the Bill would add an additional nine cents a litre to the petrol price, and 10 cents to the diesel price.
“Our hope is that the new government will immediately set out a policy agenda which has a direct impact on fuel prices.”
However, economics expert Jannie Rossouw was less optimistic. He said the increase was to be expected with the weak exchange rate and higher price of oil.
He added: “The government needs money desperately because of the previous Zuma administration, which stole money. So we should brace for more taxes. We may even see a 16% increase and other taxes of all sorts soon.”
Organisation Undoing Tax Abuse (Outa) CEO Wayne Duvenage said the government’s push for levies was becoming excessive.
He said all the fuel levies combined had gone up from comprising 38% of the price of fuel per litre in 2008 to 59% per litre currently, excluding the incoming carbon tax which would make it higher.
“It won’t go down, the government has become too reliant on the revenue they get from these taxes that it’s become excessive.
“It only adds to the problem because it’s not only drivers that suffer, markets are affected and the poor.”
Following reports that US President Donald Trump had spoken to the Organisation of the Petroleum Exporting Countries (Opec) about reducing oil prices, Rossouw said there was very little chance the benefits would trickle down to South Africa.
He added: “Opec won’t listen to Trump, they want the highest oil price! It’s like asking Zuma to go to jail, it will not happen. This is just basic economics.”