Fuel price cut may be diverted to state levy to replace e-tolls

A welcome fuel price reduction may be hijacked to increase the fuel levy in place of e-tolls.

That’s according to Organisation Undoing Tax Abuse (Outa) chief executive Wayne Duvenage, who said Outa was concerned Minister of Finance Enoch Godongwana may seize the opportunity of a possible petrol price reduction to increase the fuel levy by 25c to 30c per litre to raise additional revenue to cover the Gauteng Freeway Improvement Project bonds, “which the e-toll debacle has failed to do”.

“Government has had years to come up with a workable, fair solution for funding the Gauteng freeways but may rely on a last-minute quick fix instead,” Duvenage said. Motorists can expect a healthy decrease in fuel prices in September, which will not be mitigated by any refunds to the general fuel levy (GFL).

The Automobile Association (AA) said the projected figures were based on current unaudited mid-month data from the Central Energy Fund (CEF).

“The decreases to fuel prices in August were offset somewhat by the 75c for petrol and diesel which were returned to the GFL. But the decreases expected in September don’t have that problem,” said AA spokesperson Layton Beard.

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The compiled date revealed 95ULP is expected to drop by around R2.60 and 93ULP by around R2.45.

“Recently, Minister of Transport Fikile Mbalula indicated that an announcement on the e-toll decision is expected to coincide with the minister of finance’s medium-term budget policy statement, due in October,” said Duvenage.

“Furthermore, there have been strong hints the minister of finance will increase the fuel levy, to off-set the scrapping of e-tolls. Should this happen, Outa will denounce this decision on the basis that the fuel levy has already been increased in excess of R2.50/l since the Gauteng freeway upgrade began in 2008.

“Government failed to take up Outa’s suggestion of a ringfenced 10c/l increase to the fuel levy some 11 years ago, which would have settled the freeway bonds by today.”

Duvenage said government had made “extremely poor decisions in the past, not only on the various fuel levies and taxes, but also on the road financing options available to it”.

“By increasing the fuel levy by 25c/l, an additional R5.5 billion will flow into Treasury’s coffers each year,” he said.

“Compare this to a correctly priced Gauteng freeway upgrade, which ought not to have cost the state more than R0.5 billion a year to finance this capital investment over 20 years.

“We’ve seen this before, when government makes desperate financing decisions based on short-term external factors, only to see the negative ramifications play out in the long term.”

Additional reporting by Siphumelele Khumalo