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Government will consider lowering the fuel levy: Ramaphosa

| Economic factors

President Cyril Ramaphosa has not ruled out the possibility of reviewing the fuel levies to help ease South Africa’s high fuel prices.

This was confirmed as part of his parliamentary Q&A session on Wednesday (23 August), reports Business Day.

“The fuel levy is part of fiscal architecture we have in our country. We have said we want to look at that … the fuel levy is precisely one of those we are looking at,” he said.

“We are sensitive to the burden imposed on our people.”

However Ramaphosa cautioned that reducing the fuel levy would have to be weighed against the loss of revenue for the state, which will have an effect ‘on a whole lot of things’.

“It’s not as easy as snapping a finger and coming up with an answer … it’s one of those issues we continue to look at and seek solutions for.… We import a commodity we have no control of in terms of prices,” said Ramaphosa.

On Tuesday (21 August), the department of energy appeared before MPs to explain the fuel price situation in the country, and to provide a plan of action, if any.

However, the department’s presentation by minister Jeff Radebe noted that the country was almost entirely dependent on imported products for fuel, and thus was beholden to price changes that are largely beyond its control – such as fluctuating oil prices and movements in exchange rates.

The department also warned that deregulating petrol prices in the country – by allowing companies to set their own prices and conduct business as they please – could result in prices being pushed higher, and as many as 50,000 job losses.

“If you deregulate, owners could opt for self-service and we would lose those 50,000 jobs overnight. From where we stand we don’t think that is a sustainable position. There is also no guarantee that the price would come down,” the department said.

In the 2018/19 national budget, Treasury penciled R77.5 billion in revenues from fuel levies alone.

The fuel levy currently contributes close to 6% to the gross tax revenues of the country.

The 52 c/litre increase this year, which was a combination of the 22 c/litre increase in the general fuel levy and 30 c/litre in the Road Accident Fund levy, took the total fuel tax from R4.82 to R5.34.

Without these taxes you would be paying R10.69 for a litre of 95 petrol, while a litre of 93 petrol would cost R10.47.

Fuel August official August official (without taxes)
95 Petrol R16.03 R10.69
93 Petrol R15.81 R10.47
0.05% Diesel (wholesale) R14.41 R9.07

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