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OUTA welcomes decision by government not to increase fuel levy

Jun 01, 2022

By Raahil Sain
01:06:2022

The Organisation Undoing Tax Abuse (OUTA) welcomed a decision by the government not to increase the fuel levy in its annual budget while consumers continue to battle surging fuel prices.

Petrol prices were hiked by R2.43 (95 unleaded) a litre and R2.31 (93) to compensate for oil prices and a weaker rand. 

Combined with the fuel levy of R1.50, this would hike the price of 95 unleaded petrol by R3.92 from current levels, while 93 unleaded petrol would be R3.81 more expensive.

Treasury and the Department of Energy initially announced a temporary reduction in the general fuel levy of R1.50 per litre between April and May 2022 to provide limited short-term relief to households from rising fuel prices following Russia’s attack on Ukraine.

Speaking on Radio Islam on Tuesday night, OUTA CEO Wayne Duvenage said consumers were edging closer to the R25 mark.

He said the weak rand and high taxes were exacerbating the problem.

OUTA said a lower fuel levy should be considered a permanent solution.

“This gives the Minister an opportunity to start digging deep to find savings in government because the economy cannot afford these high fuel prices,” said Duvenage.

He said, as a result, two main taxes, namely the fuel levy and the road accident fund, have gone up above inflation.

“The international oil prices have been much higher than they are now. In July 2008, the international oil price was $130 a barrel, but our petrol price was only R10.70 a litre.”

“Now you must ask yourself – if international oil prices were lower then, why is it getting closer to R25 [a litre]?”

“And that’s because, at the time, the levies added up to just over R3.50 and now just over R10 before you pay for one drop of fuel.”

Duvenage said the weak rand was a government-induced problem and should be stronger to attract investors.

“These are the problems, and it is a result of short-term thinking, previous ministers of finance, who we warned to stop pushing the envelope on these levies because it will come to haunt us, and that is exactly what is happening.”

“Government is in a real problem and is trying to raise additional taxes to try and fix the transport issues. It needs to be dealt with existing tax [and] not a new tax, we are overtaxed it’s as simple as that. We cannot afford more taxes in this country,” he said.

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