The Organisation Undoing Tax Abuse (Outa) says it is worried that the Minister of Finance Enoch Godongwana may use the sizeable petrol price cuts expected in September as an excuse to raise the fuel levy to pay for e-tolls.
Outa chief executive Wayne Duvenage said that the group is concerned the government will raise the fuel levy by 25 to 30 cents per litre to cover the Gauteng freeway improvement bonds that the e-tolling system has failed to do.
“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.
There have been strong hints that the Minister of Finance will increase the fuel levy to offset the scrapping of e-tolls, he said.
“If this were to happen, Outa would 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.”
The government failed to take up Outa’s suggestion of a ring-fenced 10c/l increase to the fuel levy some eleven years ago which would have settled the freeway bonds by today, said Duvenage.
By increasing the fuel levy by 25c/l, an additional R5.5 billion would flow into Treasury’s coffers each year.
“Our government has made extremely poor decisions in the past, not only on the various fuel levies and taxes but also the road financing options available to it,” he said. “Short-term financial gains lead to long-term negative ramifications for taxpayers.”
Duvenage added that it would not be the first time that the government has made desperate financing decisions based on short-term external factors, only to see the negative ramifications play out in the long term.
When the petrol price dropped from slightly over R14/l in mid-2014 to R10.31/l some eight months later in February 2015, the then Minister of Finance Nhlanhla Nene decided to introduce massive increases to both the general fuel levy and the Road Accident Fund levy of 30c/l (14%) and 50c/l (48%) respectively.
“This decision alone added roughly R17 billion to Treasury’s coffers each year, and permanently adding 80c/l to the price of fuel,” said Duvenage – a price motorists still pay today.
In July 2022, Mbalula said that hiking the fuel levy to pay for e-tolls had become “messy”, and given the rising price of petrol at the time, was no longer being considered an option.
E-tolls have been met with widespread resistance from road users since their inception in 2013, leading to non-payment by many and calls to scrap the system altogether. This has led to the system becoming a drain on the economy.
September petrol price
Mid-month data from the Central Energy Fund shows that there will likely be a significant drop in petrol and diesel prices in September.
The CEF showed that the petrol price could drop by as much as R2.60 litre next month, while diesel is showing an over-recovery of R2.30 per litre.
The Automobile Association (AA) said that the decrease on the horizon would not be mitigated by any refunds to the general fuel levy.
“The decreases to fuel prices in August were offset somewhat by the 75c/l for petrol and diesel, which were returned to the GFL. But the decreases expected in September don’t have that problem,” the AA noted.
The AA said that the main drivers behind the decreases are a strengthening Rand and lower international oil prices.
“The expected decreases are good news for consumers who have been battered and bruised by these prices the past six months. With these expected decreases, the price of 95ULP will dip below R23/l, and the price of 93ULP will cost just more than R22.50/l. While fuel is still more expensive now than it was at the beginning of the year, these forecast decreases do offer some relief,” said the AA.
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