Today marks the first day of South Africa’s month-long fuel levy cut, which aims to cushion households from massive petrol price hikes, but not all are happy with the government’s efforts.
Finance Minister Enoch Godongwana announced that the General Fuel Levy (GFL) has been temporarily slashed by R3 per litre to reduce fuel prices and mitigate the effects on households and the economy as a whole.
As a result, the fuel tax has been reduced from R4.10 per litre to R1.10 per litre, at least for now.
This decision will remain in place until at least the next petrol adjustment on 5 May, with the National Treasury confirming that the GFL marks the first step in its relief plan to aid South Africa’s consumers.
Despite the relief, petrol prices increased by R3.06 per litre for both octanes, while diesel prices have risen by between R7.37 and R7.51 per litre.
The increases have prompted South Africa’s biggest trade union to lobby the government to provide further relief and do more to protect motorists and commuters from price shocks.
The Congress of South African Trade Unions (Cosatu) noted that while it appreciates the effort to cushion society from international oil spikes, it believes the relief is not enough.
The union said it fears society and the economy will not cope with a R3 per litre petrol increase, much less the R7 per litre hike, and R11 for paraffin.
“Diesel is critical for the public transport that workers depend upon, as is paraffin for millions of working-class families,” stated Cosatu.
“Workers already drowning in debt, supporting up to seven relatives each and spending an average of 40% of their meagre wages on transport, will not manage such painful diesel and paraffin, and even petrol price hikes.”
More needs to be done
Cosatu noted that it is sensitive to the fiscal pressures facing the state, and welcomes the decision to put further relief in place to protect society and the economy over the next few months.
However, it added that further intervention is urgent, given that no one knows when the conflict in the Middle East will be resolved, or how long it will take for oil and gas supply to stabilise.
The Finance Ministry declared that the second phase of its relief efforts would focus on a broader review of the country’s fuel price calculation over the medium term at least.
“Work is underway on a broader package of measures to support households and key sectors of the economy. Further details on additional support measures will be announced in due course,” it said.
Treasury and the Department of Mineral and Petroleum Resources (DMPR) have been in consultations to explore additional measures to provide short-term relief to motorists.
Cosatu shared its own suggestions on how the departments can further protect consumers, noting that the most important source of relief would be to further reduce fuel tax and levies.
“This is the most impactful and cost-effective solution to this global crisis, and additional relief should be sought by making public transport more affordable to commuters,” said the union.
It added that if the war drags on and inflation rises, additional relief should be sought, including adjusting social grants and implementing measures to protect food from inflation.
The union also called on the government to engage Eskom on measures to reduce the price of electricity.
Finally, Cosatu urged the Reserve Bank to spare South Africans from further pain by not increasing the repo rate.
“This source of inflation is external and not domestically driven, and workers’ wages must be protected from further bleeding,” the union said.
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