Monday, 23 May 2022 10:36

Calls mount on the government to extend its temporary relief on fuel taxes.

By Lehlohonolo Lehana.

Motorists are in for a fuel price shock in June as oil prices continue to climb, and the government's temporary relief on fuel taxes comes to an end.

In April, finance minister Enoch Godongwana announced a temporary reduction in the general fuel levy by R1.50 per litre for April and May.

And amid calls to extend that temporary relief, the minister of Mineral Resources and Energy Gwede Mantashe said that the intervention will not be extended beyond the end of May.

Mantashe said that the funds raised from the sale of the strategic reserves were only enough to fund the reduced levy for two months. "[At the end of May] we have to meet Treasury to [see] if there can be anything more that we can do," Mantashe said.

This would mean that motorists face a scenario of paying up to R3.70 per litre more in June, with the most recent under-recovery in petrol prices recorded at around R2.25 per litre.

The Democratic Alliance on Sunday (22 May), called for an extension of the fuel tax cut.

"The admission by the minister of mineral resources and energy, Gwede Mantashe, that the general fuel levy cut won't be extended beyond the end of May, is an unacceptable dereliction of duty and a failure to enact a sustainable rationalisation of the composition of the fuel price.

"Together with Godongwana, they had two months within which to consult on whether to extend the cut in the fuel levy or provide a more permanent solution through a review of the composition of the fuel price," the opposition party said.

That they failed to do either of the two, demonstrates the government’s lack of urgency in cushioning South Africans from the growing challenges of an economy in free fall, it said.

The DA said it initiated a process to introduce a Private Members Bill (PMB) that would codify, through legislation, the deregulation of the fuel price to encourage competition between wholesalers and retailers.

The PMB will seek to protect the consumer from exorbitant price increases by decoupling the basic fuel price from government taxes and levies and additional margins used by wholesalers and retailers, said the political party.

"If projections by players in the fuel industry hold, motorists should expect an increase in fuel price by R3.50 in the first week of June. This would lead to upward pressure on inflation, hitting consumers directly through rising transport and food costs. And these prices do not ebb and flow like the fuel price.

"South Africans are already struggling to make ends meet and unemployment is soaring."

Civil action group Outa also called on the government to extend its temporary relief on fuel taxes. If the government is unable to grant an extension, Outa has suggested that the R1.50 fuel levy be phased in over three months at 50 cents a month as a compromise.

"The high fuel price has an ongoing negative effect on the economy, affecting a wide range of issues such as food prices and commuter costs," the group said.

"Keeping the fuel levy reprieve in place for a longer period provides the minister with an opportunity to seek greater public sector savings and encourage prudent spending habits," it said.