Where your money’s going
Pressure at the pumps on cards
Taxes on the fuel prices are going up and a new tax is on the cards which will bite into your monthly budget, according to tax proposals announced in the Budget in parliament yesterday. Fuel taxes as a percentage of the pump price have been rising steadily over the past few years. According to the Budget Review document, the increases on the various fuel levy taxes are below inflation but the fuel levies collectively will increase by a fairly significant 29c to 30 per litre. Any increase in fuel prices has a knock-on impact on the economy because not only does it ratchet up your own transport costs, it leads to an increase in general transport costs which results in goods and services becoming more expensive as factories, shops and businesses pass the cost onto you, the consumer. An increase in the fuel price also affects the poor more than wealthier households as their budgets are more constrained. Currently, you pay three taxes on every litre of fuel that you put into your vehicle – a general fuel levy, a Road Accident Fund levy, and a customs and excise levy. The increases in levies that will take effect on April 3 will be a 15c/litre increase in the general fuel levy plus a 5c increase in the Road Accident Fund levy. On top of this, a new carbon tax on fuel of 9c per litre is being introduced as from June 5 this year.
The general fuel levy is used by the National Treasury for general expenses and not for road-related expenses specifically, the Road Accident Fund levy portion of the fuel price is used to fund the beleaguered Road Accident Fund which uses the money to compensate victims of road accidents and the soon-to-be-implemented new carbon tax will be used to support environmental goals. During a media briefing on state-owned enterprises (SOE), which includes the Road Accident Fund and Eskom, finance minister Tito Mboweni said the RAF “was a moribund structure and system” and “conversations need to be held” on the role of SOEs. However, he confirmed the government’s stance that Eskom would not be privatised but that a restructuring was on the cards. Expressing a personal view, Mboweni said that if you buy a car it is your responsibility rather than the state’s to ensure that you have insurance in place. He referred to the role of the RAF as being “stuck in the past”.
In the 2017/18 tax year, if you live inland, you have been paying 35.6c in taxes for every litre of 93 octane fuel and 39c per litre of the diesel price. After the new carbon tax kicks in, a significant 40.6c of 93 octane petrol and 41.9c of diesel will comprise of taxes. Fuel prices in coastal areas differ from inland prices and tend to be slightly lower.