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WHY the South African general fuel levy is highway robbery

A study into the South African general fuel levy has revealed startling results. Published by Daily Investor, the South African fuel levy is the ultimate government cash cow that just keeps on giving. So, as the saying goes, “why buy the cow when you get the milk for free?”

That’s correct, almost unseen, government has pocketed R730 billion in revenue to date from the South African general fuel levy. Revenue for the National Treasury has increased by 92% over the last 10 years. Moreover, it generated R93.3 billion in the 2023/24 financial year (5% of tax revenue) alone.

SOUTH AFRICAN GENERAL FUEL LEVY

The National Treasury’s tanks are definitely nearing full with the South African general fuel levy. Image: File

Furthermore, the South African general fuel levy and other taxes account for nearly 30% of the price we pay at the pumps with every refill. So, as hard hit as motorists have been by fuel price increases this year, the cost is still worse than it should be.

Taxes on petrol make up 26.8% of the price, and 28.1% of the diesel price. That is more or less R6 of the total price of fuel per litre. Multiply that by your average 45-litre tank and that’s R270 into the government’s pocket per fill up. Assuming you commute regularly and need three tanks per month, that’s R870 a month. In turn, that’ll add up to R9 720 per annum. If you banked R10 000 a year in retirement savings, you could build yourself a sizeable nest egg.

FUEL PRICE BROKEN DOWN

Above inflation taxes and levies of fuel are hurting the poorest citizens in South Africa. Image: File

Therefore, R12.78 per litre (55%) goes towards the actual cost of fuel, says the Automobile Association (AA). Then there’s retail margin which is roughly 15%, R3.49 per litre. 17% is the South African general fuel levy, R3.96 per litre. Finally, the Road Accident Fund (RAF) levy nicks another R2.18 per litre out your back pocket.

According to a Business Tech report, back in 2004, fuel cost just R3.69 per litre. Compare that to the current fuel price of R24.13 per litre and things look pretty dire for South African motorists. Using an inflation calculator, adjusting the fuel from 2004 to today, we should only be paying R10.69 per litre.

Furthermore, even factoring in the South African general fuel levy and other taxes which make up more than 50% of the current fuel price, the price at the pump should be in the region of R21.20 per litre. As before, it’s the extra R3 per litre that’s screwing us, Mzansi.

TAX HIKES HURT THE POOR

Latest indicators suggest an increase in SA fuel prices for April 2024, says the Automobile Association (AA). Image: Pexels

In conclusion, the AA says above-inflation tax and levy hikes, “hurt the poorest of the poor in the country, as many people rely on public transport. Therefore, if the price of fuel increases, the only way to recover costs is by passing them to the consumer,” says the AA. Moreover, the AA is concerned the South African general fuel levy is the ‘go-to tax’ for a quick win for government.

NEXT READ: HOW much South African groceries cost 40-years ago

What do you think of the South African general fuel levy? A necessary tax revenue source or highway robbery for poor South Africans? Be sure to share your thoughts with our audience in the comments section below. And don’t forget to follow us @TheSANews on X and The South African on Facebook for the latest updates.

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