The Motor Industry Staff Association (Misa) has revealed that it has received no further communication from the now defunct Department of Mineral Resources and Energy (DMRE) regarding the review of the current fuel price methodology.
This comes approximately two years after the DMRE said it had already “commenced” the process of reviewing the country’s fuel price calculation in the face of record-high fuel costs that plagued motorists at the time.
Among the proposed changes was the complete scrapping of the General Fuel Levy (GFL), one of the largest taxes imposed on fuel prices at the moment.
In April 2022, Finance Minister Enoch Godongwana said that government was working towards the complete removal of the GFL.
“We are taking the fuel levy completely out, but it cannot be done in one financial year – that would throw the fiscal framework off by R90 billion,” he said at the time.
The enormous sum is the amount of revenue government would forgo if the GFL is fully taken out of the current fuel price equation, which it indicated could be recouped through additional taxes on vehicle licence renewals.
Other suggestions included revising the way in which industry margins are calculated, however, this was slammed by industry stakeholders as being a short-sighted approach to curbing the country’s high fuel rates.
Industry margins include retail and wholesale margins, as well as storage and distribution costs, and pay for everything from employee salaries to the transport of petrol and diesel from the country’s ports to its inland distribution hubs.
Given the importance of industry margins and their small slice of the fuel price structures (<10%), the Road Freight Association noted that the DMRE should rather investigate exorbitant taxes and levies – which account for approximately 30% of the fuel calculation – in order for the review to have a meaningful impact on prices at the pumps.
Radio silence
Misa operations CEO Martlé Keyter said that since the initial announcement was made some two years ago, the association has received nothing but complete radio silence from the DMRE and National Treasury.
According to Keyter, Misa was invited to participate in the fuel price review in July 2022 but the process failed to progress beyond this point, Engineering News reports.
In October 2023, the DMRE confirmed to TopAuto that it had not yet begun the process “due to internal budgetary constraints” and that it was “seeking approval to utilise the Equalisation Fund for the review and awaiting National Treasury’s approval.”
Hence, the department said it hopes to kickstart the review in 2024 once it gets the go-ahead from Treasury.
However, Misa is concerned that under the new Government of National Unity – which splits the previously known DMRE into two entities: the Department of Mineral and Petroleum Resources and the Department of Electricity and Energy – the review will be delayed even further and the current level of taxes and other input costs will remain the status quo.
“Our dire economic situation requires swift responses. We can’t waste another two years. South Africans need to know if the high fuel levies and taxes can be justified,” said Keyter.
“We want to be a part of the solutions to find another source of income for government, other than fuel.”
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