Calls to extend petrol tax relief as South Africa faces R25 a litre at the pumps in June

Calls to extend petrol tax relief as South Africa faces R25 a litre at the pumps in June

25 May 2022 | Economic factors

Civil action group Outa is calling on the government to extend its temporary relief on fuel taxes to be extended beyond the 31 May deadline.

Finance minister Enoch Godongwana announced the relief measures in April 2022 where National Treasury reduced the general fuel levy by R1.50 for price adjustments in April and May.

The relief was necessary to combat fuel prices that have skyrocketed since the start of the year, driven largely by Russia’s invasion of Ukraine, which caused a surge in global oil prices.

Despite the R1.50 saving grace, however, petrol prices in South Africa have continued to climb significantly, with further hikes projected for June.

Under-recoveries in fuel prices on 17 May show that petrol prices are set to increase by R2.12 to R2.17 per litre in June, while diesel is expected to increase by between R1.51 and R1.53 per litre.

With the R1.50 levy re-entering the picture, this means that motorists could see a R3.67 per litre hike for petrol and a R3.03 per litre hike for diesel, potentially pushing prices to as high as R25.50 per litre at the pumps.

Outa has written to Godongwana, calling for the government to continue its interventions.

“With the temporary fuel levy reduction of R1.50 intended to be reversed on 31 May, we have asked the finance minister to consider the extension of this reprieve, failing which the price of petrol and diesel will increase to over R25 per litre in the coming months,” said Outa CEO Wayne Duvenage.

Duvenage estimates that extending the reduction in the levy will affect National Treasury’s collections by roughly R2.8 billion a month; however, he said the economy will be “significantly worse-off with petrol prices in excess of the R25 per litre mark”.

If the government cannot grant an extension, Outa has suggested that the R1.50 fuel levy be phased in over three months at 50c a month as a compromise.

“The high fuel price has an ongoing negative effect on the economy, affecting a wide range of issues such as food prices and commuter costs,” the group said.

“Keeping the fuel levy reprieve in place for a longer period provides the minister with an opportunity to seek greater public sector savings and encourage prudent spending habits,” it said.