Minister of Mineral and Petroleum Resources Gwede Mantashe has indicated that discussions between his department and National Treasury on ways to reduce fuel prices are ongoing.
This includes exploring how to cut fuel taxes that have driven prices at the pump above R20, according to News24.
Speaking at the African Oil Week (AOW) in Cape Town on Tuesday, Mantashe noted that consumers had benefited from five consecutive months of fuel price reductions, including a R1 decrease in both petrol and diesel prices in October.
However, Mantashe noted that despite these reductions, South Africans are still grappling with the rising cost of living, prompting government discussions on further reducing fuel prices. In his opening remarks, he said:
“To make life more affordable for all South Africans, we have already begun with discussions about reducing administered prices, including the price of fuel and electricity. Included in the discussions of fuel prices are discussions on, but not limited to, the general fuel levy [GFL] and the Road Accident Fund [RAF] levies. We intend to conclude these discussions in the shortest possible time for the country.”
Taxes such as the GFL and RAF levy contribute significantly to the price of petrol and diesel.
Between 2008 and 2021, the GFL costs rose by 225%, while the RAF levy surged by 425%, according to Stats SA.
The RAF levy has remained unchanged for the last three financial years at R2.18 per litre for both petrol and diesel.
The levy is a primary source of income for the fund, which compensates victims of motor vehicle accidents.
Meanwhile, the GFL, set at R3.96 per litre for petrol and R3.84 per litre for diesel as of April, is one of the government’s key revenue streams. In the 2019/20 financial year, the levy accounted for 6% of total tax revenue, contributing R80 billion to the national coffers.
During his budget speech in February, Finance Minister Enoch Godongwana announced that the GFL would remain unchanged for the 2024/25 financial year, providing R4 billion in tax relief to South Africans.
At a media briefing following his speech, Mantashe said the GFL and RAF levy had "distorted" fuel prices to R20. According to his department's estimates, the true price of petrol and diesel should be around R14.
“There is a broad discussion on how the fuel price can be reduced, taking into account the cost of living. One of the things we are looking at, including having engagements with National Treasury, is the RAF and general fuel levy. National Treasury will look into the impact on the fiscus for the general fuel levy, and we will look into the impact on general living standards.”
“The [levies] are distorting the fuel price in a big way. Unless we ring-fence these, we will not see the decrease in price of fuel. The impact is not visible of this decrease because of the general levy and RAF,” he said.
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