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No joy for consumers as carbon tax to negate expected petrol price drop

A labour economist said consumers would still be hit hardest even though fuel prices were expected to remain relatively unchanged in the coming weeks.

Empty wallet. Picture: sxc.hu

CAPE TOWN - A labour economist said consumers would still be hit hardest even though fuel prices were expected to remain relatively unchanged in the coming weeks.

According to the Automobile Association, a 7 cents per litre reduction could be expected in the price of petrol.

Diesel is expected to increase by about 12 cents and illuminating paraffin by nine cents.

This excludes the introduction of a carbon tax in June, which would add an additional 9 cents per litre to the petrol price and 10 cents to the diesel price.

While the price of fuel has ebbed and flowed, consumers continue to face rising food and public transport costs. A year ago, consumers paid around R14,72 for a litre of petrol. The has increased to R16,48 per litre.

Labour analyst Andrew Levy said: “The fact that the fuel price is relatively stable at the moment and maybe for the next two weeks is not that significant. What we have to do is look at what has happened to the fuel price over the last year compared to workers’ salaries that have only gone up by 4% or 6%, whereas the fuel increase and cost of transport have been vastly greater than that.”

A 2018 report by the SA Labour Market Monitor statistics showed that 21% of workers' income goes toward transport costs.

The Automobile Associations has urged the new government to immediately set out its policy agenda, which has a direct impact on fuel prices.

CARBON TAX

Earlier this year the National Assembly passed the long-awaited Carbon Tax Bill.

Based on the 'polluter pays principle,' companies which exceed the threshold of carbon emissions for a particular activity, would be charged R120 per ton of carbon dioxide emissions.

The new tax is expected to come into effect in June and tax incentives will be offered to minimise the impact.

South Africa became party to the Paris Agreement on climate change, committing to reduce greenhouse gases by 42% by 2025.

At the time, Deputy Finance Minister Mondli Gungubele said substantial technical changes were made to the policy to take into account stakeholder comments.

“I would like to emphasise that climate change is a reality and we will have to prepare to operate in a carbon-constrained economy over medium to long-term. Operating on business as usual basis is no longer an option.”

While the EFF, IFP and Cope supported the bill at the time, the DA's Alf Lees said the country could not afford to introduce another tax.

“What South Africa needs is not extra taxes, instead we need a decrease in taxes in order to stimulate the economy and create jobs.”

(Edited by Shimoney Regter)

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