Increase in RAF, general fuel levies should be in line with inflation: AA

The Automobile Association (AA) has called on government to keep any increases in the general fuel and Road Accident Fund (RAF) levies in line with average inflation of around 6%.

Part of the Budget Speech by Finance Minister Malusi Gigaba on February 21 is expected to include an announcement on these levies‚ both of which are included in the price of petrol and diesel.

Money collected from the General Fuel Levy goes directly to the national fiscus and can be allocated to any item Treasury sees fit‚ not necessarily on transport road-related items.

However‚ the RAF levy is paid to the Road Accident Fund and is used to compensate victims of motor accidents.

The AA said with a budget shortfall of around R50bn in 2017‚ this might seem an ideal mechanism for Gigaba to source additional revenue.

However‚ the AA urged government to be careful in determining future hikes in these taxes‚ and said government must consider the impact these increases have on especially the poorest of the poor in the country.

“It will impact the poorest of the poor hardest‚ as they mostly rely on public transport. Road users in general are already under enormous financial strain; a big increase to these levies will certainly place an even greater burden on them‚” the AA said in a statement.

Currently the General Fuel Levy is R3.15 and the Road Accident Fund levy R1.63. Together these levies total R4.78‚ which roughly makes up 33% of the total cost of a litre of fuel.

Last year‚ the levies increased by almost 9% on the 2016 prices‚ way above the CPI inflation rate‚ recorded in November 2017 at 4.6%.

The AA said since 2013‚ increases to the levies had been above inflation.

“Clearly the rate of increases in the levies outstrips inflation considerably and motorists and road users may well feel aggrieved that they are seen as an easy source of revenue‚ at a time when they are having to tighten their belts.

“For this reason we are advocating for increases to the levies which are in line with average inflation of around 6%.”

The AA said any increases higher than inflation would constitute considerable rises to the fuel levies.

“We cannot support such hikes and urge government to make their decision carefully‚ and with the interests of all road users in mind‚” the AA says.