NEVA MAKGETLA: Why cutting the fuel price levy is not a simple matter
The unequal impacts and high externalities associated with the petrol price hike mean it shouldn’t simply be reversed
The petrol price hike underscores two central pressures on economic policy in SA. On the one hand, SA’s unusually deep income inequality means that while the policy demands of well-off households generally dominate the public discourse, they often do not reflect the critical concerns of the low-income majority. On the other hand, economic decisions can no longer ignore environmental costs around climate change. In the four months to July the price of unleaded petrol spiked almost 20%. The immediate causes were a recovery in global petrol prices, which coincided with a weakening in the rand, along with most other emerging-market currencies. The petrol price hike has a profoundly different impact on low-and high-income households. Lower-income families depend on public transport. In the two years to April 2018, fares climbed only about half as fast as the petrol price. In rand terms, Statistics SA’s Living Conditions Survey for 2015 found that households as a group spent R75bn on petr...