Calls for fuel levy relief to remain

WITH fuel prices expected to increase again next week, there are renewed calls for the R1.50 fuel levy relief to remain in place.

Announcing the extension of the levy reprieve in May, Finance Minister Enoch Godongwana said the R1.50 reduction would be adjusted to 75c per litre from

7 July to 2 August.

However, the Organisation Undoing Tax Abuse (OUTA) said this would have a negative impact on fuel prices, effectively hitting consumers hard.

'Should the minister reduce this to a reprieve of 75c per litre as planned, we can expect a petrol price increase of around R2.50 in July, thereby pushing the price of 95 octane inland from R24.17 per litre to around R26.70,' said OUTA CEO Wayne Duvenage.

'While we understand the negative impact of around R2.8-billion in tax revenue to the fiscus for every month the R1.50 per litre fuel levy reprieve remains in place, we believe that while petrol prices remain above R22 per litre, the minister would be wise to retain the full R1.50 reduction,' he said.

Duvenhage said the minister should wait until the 'geopolitical factors, combined with an improvement in the rand exchange rate, are able to bring about significant reduction to the price of petrol'.

He said the General Fuel Levy is the fourth largest tax source for Treasury (after PAYE, VAT and company tax), generating around R89-billion per annum for the fiscus.

'OUTA is not naïve enough to believe the State would scrap the entire fuel levy going forward, or at least certainly not during these times of heightened fiscal pressure.

'However, the fuel levy is one of the tax elements that government is able to adjust at short notice.

'We also believe that government must find a solution to the runaway costs of the Road Accident Fund (funded by another fuel levy of R2.18 per litre), which requires urgent professional intervention.

'This levy should either be reduced, or not tied to the price of petrol,' he said.