We're paying way too much tax for our fuel, says Outa's Duvenage

Local motorists were given some good news at the beginning of April - a substantial drop in the fuel price.

However, the decrease should have been even bigger, and taxes and levies now make up a shocking 68% of fuel price, says the Organisation Undoing Tax Abuse (Outa), which has called on the government to reduce the tax burden on motorists.

Despite a 28% drop in the basic fuel price because of weaker international oil prices from March to April this year, the local fuel price has been reduced by only 10% - from R15.84 to R13.96 (95 unleaded, inland) - over the same period, said Outa CEO Wayne Duvenage.

The Basic Fuel Price (BFP) component of the overall price of petrol in South Africa is directly affected by the international oil price, as well as the rand/dollar exchange rate.

From 2009 to 2014, the BFP made up the largest component of the price of petrol in SA - ranging between 51% and 58% of the price of petrol (for 95-octane at the inland price per litre). “However, with government’s ever-increasing taxes and levies applied over the past decades, the BFP component has now reduced to around 30% of the total price of petrol,” said Duvenage.

The various taxes and levies that make up the “non-fuel” related costs consist of the Fuel Levy (FL), the Road Accident Fund (RAF) contribution, wholesale and retail margins, plus other smaller transport and storage charges. In 2009, the combined value of these charges amounted to R3.61 - or 49% of the total fuel price. Today, that figure has risen to R9.48 and makes up 68% of the fuel price.

Outa has repeatedly raised its concern over ever-increasing fuel taxes and levies added to the price of petrol and diesel over the years.

“Once again, we call on government to halt its incessant increases of fuel levies,” said Duvenage. “We trust that post the Covid-19 crisis, the government will focus on reducing the ever-increasing cost of public administration and thereby rely less on the need to increase taxes and levies that have become a substantive burden on the taxpayer.”