Petrol price cuts welcome, but what about billions we contribute to govt through fuel levy?

While motorists experienced some fuel price relief in June, with more expected in July, petrol and diesel still cost much more than just a few years ago.

Fuel prices are over 50% higher than two years ago and nearly double what they were a decade ago, reports MyBroadband.

It's an ongoing debate whether we need to cut or scrap levies which push up fuel prices in South Africa.

Motheo Khoaripe (in for Bruce Whitfield) gets some input from Layton Beard, spokesperson for the Automobile Association of South Africa (AA).

"I think a lot of people certainly will say the recent fuel price cuts are still not enough... The big issue obviously, is do we really need those taxes that are attached to fuel?"

"The two big ones are the General Fuel Levy and the Road Accident Fund (RAF) levy, and combined they comprise around R6.20 on every litre of fuel."

Layton Beard, Spokesperson - Automobile Association of SA

Arguments against scrapping the General Fuel Levy centre on the benefits it does bring to the country.

It's the fourth biggest tax collected by government Beard says, contributing 5-7% of GDP.

The fuel levy generated R93.37 billion in revenue in the 2023/24 financial year.

Beard notes that in its absence, government would look for other avenues to generate that contribution to the fiscus.

"It's a huge tax and it's an easy tax to collect - you pay it and you don't even know you are. It's an equitable tax in the sense that everybody with a vehicle is going to pay that R3.95 for petrol and R3.70 for diesel."

"Our fear is that if you were to remove that tax and just scrap that R4, government would look for other ways to generate that almost R95 billion that it currently gets."

Layton Beard, Spokesperson - Automobile Association of SA

This could take various shapes like higher income tax or VAT, which would hurt the poorest of the poor the most, Layton points out.

The argument to scrap the RAF levy is a stronger one, he says, because the Fund is a financial burden on the state.

"The RAF levy is around R2.18 on every litre of fuel... and the Fund is in a very poor financial state. I think that is a huge concern for government; certainly it's a huge concern for civil organisations and many people question whether there is actually bang for buck in that tax."

Layton Beard, Spokesperson - Automobile Association of SA