Fuel price hike will be even higher due to Mboweni’s levies – AA

The Automobile Association of South Africa (AA) has warned motorists to brace themselves for a higher increase in April than expected, according to the unaudited mid-month fuel price data released by the Central Energy Fund (CEF).

While the projected basic fuel price increase is being billed as 98 cents for petrol, 70 cents for diesel and 63 cents for illuminating paraffin, fuel levies following Finance Minister Tito Mboweni’s 2019 budget will mean the increases will be higher than this, with the association predicting petrol to rise by R1.18 a litre and diesel by 90 cents a litre.

The AA notes that there are no levies added to illuminating paraffin, which has been declared a vat-free zero-rated commodity.

“Movements in the exchange rate have contributed 23 to 26 cents of this increase, with the balance coming from changes in international product prices. It notes that the CEF’s analysis shows that international oil prices contributed 73 cents a litre of the rise in the case of petrol,” a post on the AA’s website says.

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“It is difficult to reconcile that figure with the general stability shown by the daily prices since the start of March. We hope that data will provide more clarity as the month unfolds, but there is a further fly in the ointment, which is that increased fuel taxes become applicable in April.

“This will add 20 cents a litre to the April increase – 15 cents for the fuel levy and 5 cents for the RAF levy. This will push the proportion of taxes and levies on the fuel price to around 38% of the cost per litre in the case of 93 unleaded petrol.”

“When fuel taxes were proposed as a roads funding mechanism, the government resisted, claiming they were anti-poor. But the fuel levy has nonetheless risen by nearly 22% over the past three years. Given what is emerging at the Zondo commission of inquiry, motorists are justified in asking what this money is being spent on,” the statement concludes.

Following Mboweni’s budget speech on February 20, the AA expressed relief that Mboweni did not increase fuel levies above inflation, as was the case in his predecessor’s budgets for the last few years, despite speculation that he might.

Mboweni announced in his speech that changes to the fuel levies would be implemented alongside the fuel price increases on the first Wednesday of April.

(Compiled by Daniel Friedman)

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