Consider effect on consumers before raising fuel levies, AA urges Godongwana

The Automobile Association (AA) says finance minister Enoch Godongwana must think carefully about the negative effects increasing fuel levies would have on consumers before making any decision to do so, when he delivers his budget speech in parliament on Wednesday.

The AA says the two largest levies on fuel — the General Fuel Levy (GFL) and the Road Accident Fund Levy (RAF Levy) — account for R6.13 of every litre of petrol and diesel sold in the country, and already generate billions of rand in state revenue.

The GFL is R3.95/l and the RAF Levy is R2.18/l. Neighbouring countries that buy fuel from SA do not add these taxes, making their fuel cheaper than it is in the country that supplies them.

“As we have noted in the past, these levies comprise a significant portion of the money spent on fuel, and many South Africans rightfully question how this money is allocated, and whether they receive any benefit from paying these taxes.

“Apart from that, the impact of increasing the levies will be felt by all because they will result in higher input costs across various sectors and will be recovered through higher prices at the till,” the AA said.

In April 2022, May 2022, June 2022 and July 2022, the government reduced the GFL by R1.50/l amid significant fuel price hikes at the time. However, the current levy rates returned in August and have remained in place since.

“We are concerned that the levies — left unchanged since late 2022 — will now be targeted for increases. We warn, however, that raising the rates of these levies will be counterproductive and cause more financial hardships for already embattled consumers. We know that consumers face rising costs of living while they either don’t have any income at all, or their salaries and wages are not adjusted because of prevailing weak economic conditions,” the AA said.

For several years, the AA has called for a review of the current pricing structure of fuel, particularly since fuel is so closely linked to the country’s economy. It says an audit of the fuel pricing structure is long overdue and that the government must act without hesitation to establish ways to mitigate against rising fuel costs.

“South Africans are struggling and the situation of millions of people is getting progressively worse each month, with many not able to afford basic goods.

“Rising fuel costs result in more expensive goods and services, which push people even deeper into financial hardship,” the AA said.

“While we accept that minister Godongwana will have to walk a financial tightrope in crafting his budget — as all his predecessors have also had to do — we call on him not to ignore the most important element in his speech: the SA public. Lumping the country with increased fuel taxes will not, in our view, serve any useful purpose and will, effectively, place a harsher burden on citizens at a time when they already cannot carry their current burden any longer.”

Any adjustments to the fuel levies announced by Godongwana on Wednesday will come into effect in April.