Outa urges government to extend fuel levy relief

The Organisation Undoing Tax Abuse (Outa) has called on finance minister Enoch Godongwana to extend the R1.50/l reduction of the general fuel levy which expires on May 31, as consumers brace for another sharp increase in the petrol price at the beginning of June.

The government announced the 40% cut in the fuel levy in April as part of a R6bn package to ease the burden on motorists. But the petrol price is set to rise as much as R2/l in early June as crude oil prices have soared on suply concerns and the reintroduction of the levy would see the price jump by R3.50/l.

“With this temporary fuel levy reduction of R1.50 intended to be reversed on May 31, we have asked the finance minister to consider the extension of this reprieve, failing which the price of petrol and diesel will increase to over R25 per litre in the coming months,” said Outa CEO Wayne Duvenage.

Extending the reduced levy would affect National Treasury’s collections by about R2.8bn a month, but the economy would be significantly worse off with further petrol price hikes, Duvenhage said.

Outa alternatively suggested that Godongwana consider phasing in the levy over three months at 50c a month.

“The high fuel price has an ongoing negative effect on the economy, affecting a wide range of issues such as food prices and commuter costs,” Duvenage said.

“Outa also believes that keeping the fuel levy reprieve in place for a longer period provides the minister with an opportunity to seek greater public sector savings and encourage prudent spending habits.”

Unleaded 95 petrol costs R21.84/l inland and R21.09 at the coast. The wholesale price of 50 ppm diesel is R22.15/l inland and R21.56 at the coast.