There are new fuel levies and a carbon tax imposed on South African motorists after the 2019 Budget Speech. Here's what you need to know.
The Automobile Association (AA) has reacted to yesterday's Budget Speech. “Even though the increases to the General Fuel and Road Accident Fund levies are lower than expected, we remain concerned that these levies are seen as the ‘go-to’ taxes for easy increases by government. Now, with the addition of the Carbon Tax on fuel, this ‘easy’ tax collection method is being further exploited, thus adding another line of tax to the fuel price,” says the AA.
As it stands, motorists currently pay R5.34 towards indirect taxes on every litre of petrol bought, and R5.19 on every litre of diesel. This is comprised of R3.37 (petrol) and R3.22 (diesel) for the General Fuel Levy, R1.93 for the Road Accident Fund levy (for petrol and diesel) and four cents for customs and excise taxes (petrol and diesel).
After the Budget Speech, these levies will now increase by a combined 29 cents for petrol and 30 cents for diesel which include a nine and ten cent addition for the Carbon Tax on petrol and diesel respectively, and from April, these levies will come to a total of R5.63 for petrol and R5.49 for diesel.
“These increases will comprise anything between 40 and 42 percent of every litre of fuel bought depending on the type of fuel used and where it is purchased (either inland or coastal). This represents a substantial portion of the fuel price and, in our opinion, adds to the burden especially poorer consumers carry directly through paying these taxes, and indirectly through the costs passed on to them by manufacturers and retailers who also have to pay these taxes,” says the AA.
The new carbon tax is a big worry. Motorists are being unfairly punished for using what the AA deems "inferior quality fuel" and the issue is that motorists can't avoid this tax as there aren't any higher quality fuels. As for the fuel price, the AA is particularly worried about the future. “Fuel is a volatilely-priced commodity; geopolitical developments affecting international oil production and supply, and the value of the Rand against the US dollar both play a major role in its monthly determination. While 2019 has begun relatively smoothly in terms of the fuel price – especially compared with the extreme variations seen in 2018 (which included record highs of over R17/l for some fuels) – there is no guarantee prices will remain as flat as they are currently. In fact, forecasts for March already show a more than 50 cents increase, perhaps even higher,” states the AA.
As always, we'll keep you posted on the petrol price fluctuations as they happen.