Fuel levies set to increase later this month, say experts

Early February fuel price decreases could be short-lived, as experts anticipate an increase to the fuel levy later this month, Zululand Observer reports.

As part of Finance Minister Malusi Gigaba’s budget speech to parliament on 21 February, increases are expected on both the General Fuel and Road Accident Fund levies, both of which are included in the price of petrol and diesel.

READ MORE: Petrol price set to drop in February

‘With a budget shortfall of around R50 billion in 2017, this may seem an ideal mechanism for the minister to source additional revenue,’ said the AA (Automobile Association) in a statement.

But the association has urged government to be careful in determining future hikes to these taxes, and must consider the impact these increases have on citizens.

‘It will impact the poorest of the poor hardest, as they mostly rely on public transport,’ said the AA. ‘Road users in general are already under enormous financial strain and a big increase to these levies will certainly place an even greater burden on them.’

The General Fuel levy is currently at R3.15 and the Road Accident Fund levy R1.63.

Together these levies total R4.78, making up about 33% of the total cost of a litre of fuel.

Last year, the levies increased by almost 9% on the 2016 prices, almost double the Consumer Price Index (CPI) inflation rate which was recorded in November last year at 4.6%.

Increases to these levies have been above inflation since 2013, climbing by more than 8% in 2013 while the average CPI that year was 5.7%.

In 2015, average CPI ended on 4.6% while the levies rose by a staggering 24.7%.

In 2017 the levies increased by 7.33% compared to an average annual inflation of 6.4%.

‘The rate of increases in the levies clearly outstrips inflation, and motorists and road users may well feel aggrieved that they are seen as an easy source of revenue at a time when they are having to tighten their belts.

‘For this reason we are advocating for increases to the levies which are in line with average inflation of around 6%.
Should this happen, the combined levies will cost R5.07/litre; a 29c/litre increase to the current levies.

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