Slow rate of fuel tax hikes

I can’t resist the temptation to add another perspective to Neva Makgetla’s column (Why cutting the fuel price levy is not a simple matter, July 31).

After companies tax, personal tax and VAT, fuel tax is the fourth-largest single source of taxation in SA at about 5% of the total, so it is an important source of revenue. Between 2003 and 2015-16 fuel taxation increased on average by more than 10% a year in nominal terms and 5% a year in real terms.

This is higher than economic growth, vehicle population growth and fuel sales growth, yet it was accepted without a national outcry.

The fuel tax is considered general taxation and there is no link between maintenance of national roads and the extent of the fuel tax. The funds are being used for other purposes than roads construction and maintenance.

The impact on SA’s balance of trade is questionable – users pay the full cost of fuel at present. Is the government expected to subsidise the fuel price but retain taxation?

The external cost of pollution from transportation fuel is negligible; other sources of air pollution are more serious. In countries such as the US, fossil fuel use is decreasing (electric vehicles), but this is not expected in SA in the short to medium term. Fossil fuel use will eventually start to reduce locally though.

The balance between private car use and public transport use is an issue. The former is a source of revenue, while the cost of the latter is becoming an affordability matter.

All said and done, I agree that cutting the fuel price is not a simple matter and in view of the e-toll problem, it is out of the question.

However, the rate of increase in fuel taxation can be slowed down.

Hein Stander Bellville