Review of fuel levy ‘is possible’

By Bekezela Phakathi for Business Day

The possibility of reviewing the fuel levies downwards to ease the financial burden on motorists and consumers has not been ruled out, says President Cyril Ramaphosa.

“The fuel levy is part of fiscal architecture we have in our country … we have said we want to look at that … the fuel levy is precisely one of those we are looking at,” Ramaphosa said in parliament on Wednesday

“We are sensitive to the burden imposed on our people.”

The price of fuel recently went up to more than R16 a litre in inland provinces. The hikes are expected to have a ripple effect on the economy.

The price of a litre of petrol in SA has more than doubled in 10 years, while the levies increased from about R1.30 in 2008 to the current R5.30.

The fuel levy contributes close to R63bn annually to the fiscus. The Road Accident Fund levy accounts for R1.93 of the fuel price. Taxis and other public transport operators have already upped their fares in response to the increases.

Ramaphosa said any decision would have to weigh the advantages of reducing the fuel levy against the loss of revenue for the state, which will have an effect “on a whole lot of things”.

“It’s not as easy as snapping a finger and coming up with an answer … it’s one of those issues we continue to look at and seek solutions for.… We import a commodity we have no control of in terms of prices,” said Ramaphosa, during a question-and-answer session.

DA leader Mmusi Maimane had asked Ramaphosa whether there was a plan to reduce the fuel levy, which he called a “corruption tax”. “The RAF [Road Accident Fund] is declaring losses and money is being wasted. Is there a plan to reduce the fuel levy?” he asked.

Department of energy officials told parliament on Tuesday that any adjustment to the fuel levy could only take place in the next financial year.

The government has said before there is nothing much it can do to stem the fuel increases since the country imports the bulk of its requirements. The change in the price of petrol is typically a function of both changes in international exchange rates, particularly the US dollar-rand exchange rate, and the change in international crude oil prices.

Ramaphosa also answered questions on the unemployment crisis and the burning issue of land expropriation without compensation.

“Since 2009 I have heard about plans and summits, yet millions of South Africans are still unemployed,” said Maimane. “The definition of insanity is doing the same thing and expecting a different outcome or keeping the same people [in the cabinet] and expecting a different outcome.… Can we bring change so we can expect a different economic trajectory?”

Ramaphosa said the cabinet would soon announce details to stimulate economic growth, including finalising the Mining Charter and allocation of broadband spectrum.

“We want to unlock the levers that hold the economy back,” said Ramaphosa.

The president hit back at Maimane, saying: “I’ve not heard anything wise that you’ve said.… You are playing the people or the man, not the substantive issues that have to do with economic growth.”

Without land redistribution there would be no stability in the country, Ramaphosa said.

“Transformation means we must have redistribution of land because there was an injustice committed many years ago.… If you do not want stability then do not transform … but if you want stability then you must transform.… We will make sure that our country succeeds. Even the landowners must embrace this process,” he said.

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