The amount of tax South Africans pay each time they put fuel in their cars has increased substantially over the past 10 years, and is not sustainable.
This is according to OUTA CEO Wayne Duvenage, who made the statement in a recent opinion piece.
In 2008, 40% of the price you paid for a litre of 95 petrol, inland, was levies and taxes.
The remaining 60% consisted of the “basic fuel price” – which is influenced by the rand/US dollar exchange rate and the international market price of Brent Crude oil.
In 2021, these numbers have switched:
- 65% of the price you pay for a litre of 95 petrol is taxes and levies.
- 35% consists of the basic fuel price.
The graph below, from OUTA, shows how the price of fuel has changed in recent years – and displays the tax and levy increases put in place.
Click on the graph below to enlarge it.
When looking at the graph, Duvenage highlighted that while the basic fuel price in rand terms has fluctuated over the past decade, the amount the government charges for the fuel levy, RAF levy, and other levies has steadily increased.
This includes the RAF levy increasing from R0.47 in 2008/9 to R2.07 in 2021, and the fuel levy increasing from R1.27 in 2008/9 to R3.68 in 2021.
“When one looks back at the trends of these various additional levies and what lies ahead for the sale of petrol and diesel in a changing vehicle propulsion environment, these additional taxes and levies appear to be unsustainable,” said Duvenage.
“More worrying is the ratio of the basic fuel price versus these other levies and taxes in the total price of petrol.”
“This ratio has become inverted over the past decade, suggesting that the state should heed the impact they are having on our competitiveness as a nation through the over-taxation of petrol.”
Duvenage said if these taxes were being used to improve the country through infrastructure spending, which would help grow the economy, then a position that “more taxes aren’t necessarily a bad thing” could potentially be observed.
“Sadly, ours is often wasted through gross inefficiencies in leaky procurement processes that pays three times the price for infrastructure that we don’t often need, while a whole lot is lost to corruption,” said Duvenage.
“Too often, the tax increase envelope is pushed too far and the purpose of specific taxes gets lost or challenged, placing the state in a precarious position when income from existing or planned revenue streams begin to fail.”