Budget 2021: Is this the one tax hike guaranteed to happen on Wednesday?

For the past few years, Tito Mboweni has taken advantage of an ‘easy target’ during his Budget speeches. As he steps up to the podium on Wednesday, the Finance Minister is likely to plunder the pot once more: We are, of course, talking about fuel levies – the tax that accounts for almost half of what we pay at the pumps.

Budget 2021: Fuel levies may be targeted for a tax hike

The AA has issued a warning to Mboweni, demanding that he resists the temptation to crank up fuel fees once more. The minister is keeping his cards close to his chest, but with SA fighting back against an economic disaster, it’s all but inevitable that fuel levies will rise again: Motoring experts are adamant that citizens can’t stretch their pennies any further.

“A percentage increase – even one in line with inflation – may not seem onerous but combined with increases to other goods and services it will add up. South Africans are not only feeling the pinch right now, but they are feeling the bite…”

“Any other increase to the levies will add to their woes. In light of the financial devastation on businesses and individuals caused by COVID-19 we believe levy increases will be counter-productive and harmful.”

How much tax do we pay for our fuel?

There are two major taxes included in the fuel price – the General Fuel Levy (GFL) and Road Accident Fund Levy (RAF) – which together comprise between 37% and 42% on every litre of petrol and diesel sold in the country…

• – The GFL accounts for R3.77 per litre of petrol, and R3.63 per litre of diesel

• – The RAF stands at R2.07 for each litre of either petrol or diesel.

• – That means motorists pay between R5.70 – R5.84 on taxes for each litre of fuel.
  

Tito told to ‘turn down’ the temptation

Tito Mboweni has had to deliver some difficult Budget speeches in his time: Threats of load shedding, junk statuses, and soaring unemployment rates have made his job a nightmare – and yet, the impact of COVID-19 is likely to dwarf these problems. Extra tax on tobacco & alcohol is also under consideration – but it is our fuel levies that are right in the firing line:

“Any increases to the fuel levies go hand-in-hand with increases to public transport fares – including taxis. Increases to the fuel levies contribute to increased input costs of manufacturers, suppliers and the agricultural sector which are absorbed through increases passed on to consumers, many of whom cannot afford even slightest changes to their monthly budgets,”