With petrol prices expected to reach record highs, rising above R21 a litre, the Treasury chose not to increase fuel taxes for the first time since 1990.
Between 2011 and 2021, the petrol price increased at an average of 8.2% per year, placing a strain on all sectors of the economy and consumers, according to Treasury budget documents.
Presenting his maiden budget speech on Wednesday, finance minister Enoch Godongwana acknowledged the challenges that rocketing petrol prices were forcing on South Africans.
“The higher prices have put pressure on the cost of transport, food and other goods and services. To provide some relief to households, no increases will be made to the general fuel levy on petrol and diesel for 2022/2023.”
Godongwana said keeping levies the same would provide tax relief worth R3.5bn.
Since 2012, fuel taxes and levies have more than doubled and now contribute more than R6 per litre to the petrol price, more than a third of the current fuel price.
“The fuel price affects broad swathes of the economy, from public transport to road freight and in term consumer goods,” said Treasury.
There will also be no increase in the Road Accident Fund (RAF) levy, which pays for almost 99% of the RAF’s budget even as the fund struggles with shortfalls each year. The RAF pays road accident victims and injured pedestrians medical bills.
The RAF levy costs R2.18 per litre of petrol.
Godongwana said he and mineral resources ministern
Gwede Mantashe had decided to review how the fuel methodology price is calculated.
“Our teams have already begun to engage in this critical work.” he said.
“A comprehensive review of the fuel price could significantly reduce costs in the economy,” the Treasury writes in its Budget Review document.
Petrol prices, however, are likely to rise in 2022 due to increasing international oil prices worsened by tension between Ukraine and neighbouring Russia. That is even as rand strength has helped SA cope better with rising dollar-based oil prices.
The Automobile Association, which represents ordinary motorists, had called on the finance minister not to increase the fuel taxes and levies.
The AA said that “any relief — even in the form of non-increases — would be welcome to a consumer base already reeling from economic hardship,
It pointed out on a release that inland 95 octane petrol, could rise from R16.32 a year ago to R21.39 in March, a 31% increase. The cost of diesel could rise from R14.12 over the same period — a 37% hike.
It also warned that illuminating paraffin used for light and heat by the poor would also reach record highs.
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