Lockdown brings R11bn a month fuel levy knock

The Covid-19 epidemic crisis is only the beginning of South Africa’s seething problems, with the 21-day lockdown to contain the spread of the virus projected to result in the loss of almost the entire R11-billion monthly revenue in fuel levies.

According to calculations by Justice Project SA (JPSA), about 95% of vehicles that would normally be on the road were parked, leaving only 5% for the fuel pumps and a massive loss in fuel levies.

Last year government collected more than R87.4-billion in fuel levies from the sales of petrol and diesel to raise revenues for the fiscus and for the Road Accident Fund (RAF), with monthly collections amounting to over R11.2-billion.

Howard Dembovsky, JPSA chair, said of the total monthly collections, R7.2 billion went to the fiscus and R4 billion to the RAF, which provides insurance cover to road users in respect of accidents.

“You take this 95%, less traffic because of the lockdown, and you are pretty close to what government is losing in revenue. It is not just fuel levy loss but also general tax because you are looking at the loss in VAT [Value Added Tax] and sin taxes [alcohol and cigarettes]. It is a huge hole on the fiscus, which provides for things like social grants,” he said.

Dembovsky said the haunting question, since government solely relied on taxes to operate, was where the money to plug the fiscus hole would come from.

“As much as the fact of life and death, where will that money come from?

“Treasury estimates are that up to 12,000 small businesses will go under due to the Covid-19 crisis. We are headed for a financial disaster we have never faced,” he said.

Dembovsky said government had two options to plug the fiscus hole: introduce emergency tax to avoid bankruptcy or take a begging bowl to the international funding organs like the International Monetary Fund.

According to Arrive Alive, vehicle activity has plummeted by 75% since the implementation of the lockdown, with vehicle activity having already dropped by up to 20% before the lockdown, relative to the corresponding day in early March.

The data from Arrive Alive shows that provincially, Gauteng, the country’s economic hub, and the Western Cape had the highest compliance for staying off the roads, with passenger vehicle activity reducing between 75% and 80% during the first two days of lockdown.

The highest compliance from taxis and buses was observed in KwaZulu-Natal, with a 76% reduction in vehicle movement, while the highest reduction in the movement of commercial vehicles was observed in Gauteng at 73%.

Layton Beard, Automobile Association of SA spokesperson, said the loss in fuel levies would be huge, although his organisation was yet to come up with a figure based on fuel sales after the lockdown.

“We will be able to determine to full extent of the loss at the end of April, but there is no doubt revenue on sales will be low,” he said.

Beard said with the only 20% e-toll revenue collection rate, the lack of traffic activity on the roads will be particularly devastating for the SA National Roads Agency.

– siphom@citizen.co.za

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