Petrol pump or cash cow?
Those who suspect that the taxman has increasingly been using fuel levies as a way to increase overall tax revenue are correct.
While the amount motorists pay at the pump is largely down to the vagaries of the value of the rand to the dollar, as well as the ups and downs of international oil prices, government has not been shy to use the fuel levy to boost its coffers.
This can be seen in revenue from the fuel levy shooting up from R24.48 billion in the 2008/9 financial year to more than R75.37 billion for 2018/19. By comparison, the total amount of tax collected has only doubled from R616.99 billion to R1.28 trillion over the same period.
This means that R1.77 of every litre of petrol purchased went to the taxman (in the form of the fuel levy, the Road Accident Fund levy, and customs and excise payments) 10 years ago. In this financial year, this figure has risen to about R5.73 a litre.
Hard-pressed motorists are set to contribute even more, with fuel levy income projected to rise to over R82.9 billion for the 2019/20 financial year.
Tax as a percentage of the total price of fuel has been tracking ever-higher: the 23.7% that applied to 93 Octane petrol a decade ago set to rise to 40.6% in the coming financial year. Diesel will see an even steeper increase, rising from 22.1% to 41.8%.
The signing into law of the 2019 Carbon Tax Act, which is meant to lower emissions, is also expected to increase the price of fuel in the country.
Government showed some sense and perhaps acknowledgement that it had been taking a bit more than it should have when President Cyril Ramaphosa reduced an expected increase earlier this year. It didn’t last, however; the weakening rand and rising global oil prices eventually forced it to push up local prices.
Rising fuel costs, higher interest rates and lower-than-inflation wage increases have been putting hard-pressed consumers under increasing pressure. There has been some respite as petrol prices were cut by 96c to R15.61 a litre at the beginning of the month.
Motorists are, however, not bearing the fuel levy evenly. The tax on diesel has been disproportionally higher than that on petrol as government has been pushing through higher increases on this form of fuel over the past five years.
It should be noted that as diesel, unlike petrol, is unregulated, consumers can shop around for lower prices. Diesel is also sold at a lower price per litre than petrol and is more fuel efficient.
Even so, whatever is being paid looks likely to thin out the wallets of motorists for some time to come.