Mboweni questions RAF
Finance minister says citizens need to get their own insurance in case of an accident
FINANCE Minister Tito Mboweni questioned why the government still has the Road Accident Fund as one of its entities given the poor state of its affairs.
Yesterday, Mboweni announced the fuel levy increase of 29 cents per litre for petrol and 30 cents per litre for diesel – an increase that the Automobile Association (AA) said would have a deep impact on the fuel price for the months ahead. Delivering his Budget Speech, Mboweni said the RAF levy was not enough to match the fund’s R215 billion liability.
“We urge the Department of Transport to quickly resubmit the Road Accident Benefit Scheme Bill for Parliament’s urgent consideration. It will help stabilise fuel levies.”
Speaking at a media briefing before his speech in Parliament, Mboweni questioned why the state was burdened with RAF when individuals could have their own insurance in case they were involved in accidents.
He called for a conversation about RAF and other state-owned entities in what he described as post-Soviet period. “We need to move with times.”
Mboweni noted that in government there were many considerations when a decision had to be taken. “You need to be clear about your primary objective and who you are serving.”
The RAF has a net deficit of R26.3bn and its liabilities exceed assets by R206bn as of last March.
The bill, which would replace the RAF, seeks to provide for periodic settlement payments instead of lumpsum payments to claimants.
It also provides for claimants to be provided with health care at public facilities. Mboweni said there would be a slight upward adjustment of the tax-free threshold for personal income taxes from R78 150 to R79 000 with no change in the current personal income tax brackets. “Together these will raise R12.8bn.” There won’t be an increase in VAT, but white bread flour, cake flour and sanitary pads would be included in the zero-rated goods.
The so-called sin taxes would increase as follows: packet of cigarettes: R1.14 increase to R16.66; can of beer: 12c increase to R1.74; 750ml bottle of wine: 22c increase to R3.15; bottle of whisky: R4.54 increase to R65.84; Cigars: 64c increase to R7.80.
The AA said the increase in fuel levies place consumers on the back foot before any price adjustments for the rest of the year are even made.
“Now, with the addition of the Carbon Tax on fuel, this ‘easy’ tax collection method is being further exploited, thus adding another line of tax to the fuel price.”
Meanwhile, the SA Canegrowers Association expressed concern on the increase in the sugar tax by 5.2%.
It warned that the higher than estimated revenue loss would no doubt translate into more job losses .
“The sugar tax has already dealt a huge blow to a sector struggling with the impact of drought, plunging sugar prices and weak protection against cheap imports.”