AA warns of motorist shocks ahead of Wednesday budget speech

The Automobile Association (AA) said in a statement that finance minister Tito Mboweni is faced with serious challenges while preparing the budget speech and that higher fuel levies as a source of revenue could be on the cards.

The AA said such a step would be a “dangerous and ultimately damaging tactic, especially for the poor in the country.”

General Fuel Levy, the Road Accident Fund levy, customs and excise taxes and the Carbon Tax continued to climb over the past years. The major taxes, General Fuel and Road Accident Fund levies make up 40% of every litre of fuel sold across the country. If not for that, the petrol price would be so much lower.

The AA said that these taxes currently amount to R5.59 on every litre of petrol (General Fuel Levry = R3.61 and Road Accident Fund = 1.98), and R5.47 on every litre of diesel (GFL = R3.47 and RAF = R1.98). The Road Accident Fund are in such dire financial straights that the monies received by the organisation probably fall into a dark abyss.

Neighbouring countries who buy fuel directly from South Africa do not add these taxes making their fuels cheaper than in the country which supplies them, the AA said. Any increases announced by the minister on Wednesday would come into effect in April.

“We have seen in the past that any increases to the fuel levies is met with a swift increase to public transport fares – including those of taxis. While a slight increase, even one in line with inflation, may not seem drastic, it has an enormous impact on the lives of consumers who rely on every cent to make it to the end of each month.

In addition the AA said that any proposed increase to the rate of Value Added Tax (VAT)  with an increase to the fuel levies, would be a double blow for consumers and the motor industry as a whole, one many will not be able to cope with.

“Seen against the background of government spending, a bloated civil service, looming increases to electricity rates, bailouts of State Owned Entities to the tune of billions of Rand and minimal or no increases to salaries and wages over the same period, any increase to the fuel levies now is ill-advised and counter-productive,” the AA said.

The Association said its message to Mboweni is simple: “Don’t do it minister”

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