Mboweni said that any changes to the fuel levies will be implemented along with any fuel price adjustments on 3 April, the first Wednesday of April 2019. He announced that fuel levies would increase by 29 cents.
The Automobile Association (AA) reacted to the Budget Speech and said: “We are relieved that Minister of Finance Tito Mboweni did not increase fuel levies above inflation – as has been the case in previous years – despite pre-Budget Speech speculation that this might happen.”
At the moment, South African consumers 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 RAF levy (for petrol and diesel) and four cents for customs and excise taxes (petrol and diesel).
“With the increases announced in 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 10 cent addition for the Carbon Tax on petrol and diesel respectively,” said the AA.
These increases make up 40% and 42% 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,” said the AA.
“Besides being an additional line of tax on the fuel price, the inclusion of a Carbon Tax is grossly unfair by government, given the fact that South Africans will now be paying an emissions tax on inferior quality fuel despite not having access to higher quality fuels which are available in many other markets in the world,” added the AA.
The AA has raised concerns that geopolitical developments in international oil supply, as well as the rand against the dollar, affect the price of fuel every month. This added tax exacerbates the volatile fuel price in South Africa.
[ON AIR] The Automobile Association has expressed relief that Finance Minister Tito Mboweni did not increase fuel levies above inflation. Layton Beard, from the Automobile Association of South Africa joins @UvekaR #MorningNewsToday Courtesy #DStv403 pic.twitter.com/hcqPv636H8
— eNCA (@eNCA) February 21, 2019
The price of fuel stabilised at the beginning of 2019 compared with the extreme variations seen in 2018 (which included record highs of over R17/l for some fuels). Forecasts predict that in March, the petrol price could increase by more than 50 cents or higher.
“Against this backdrop, the increases to the fuel levies will have a deep impact on the fuel price for the months ahead, placing consumers on the back foot before any price adjustments for the rest of the year are even made,” said the AA.