Cut the unjust fuel levy now!

31 July 2018

Fellow South Africans,

We all know that our people are facing a daily assault from the rising cost of living and rising government taxes.

In the past year alone, this tax war on ordinary citizens has made life extremely hard for those who can least afford it.

VAT has gone up. Income tax has gone up. “Sin taxes” have gone up. Electricity has gone up. All this while income and social grants have barely kept up with inflation.

But the one increase that has really hit poor people in the pocket has been the fuel price, because this affects the two things they spend the biggest part of their income on: transport and food.

This year alone there have been four fuel price increases in four consecutive months, with a fifth coming into effect tomorrow. And there will no doubt be more in the near future.

Every cent of every increase finds its way into taxi fares, bus fares and the price of food transported on our roads. Poor people, already stretched to breaking point, must simply pay more. And the truth is they just can’t any longer.

Thanks to the sharp increases in the cost of fuel, the cost of living is fast becoming unaffordable.

When people say this to government, they just wash their hands and say: Sorry, there’s nothing we can do. It’s the oil price. It’s the Rand/Dollar exchange rate. It’s beyond our control.

Except it’s not. When government says the fuel price hikes are purely because of global conditions and therefore unavoidable, they are not telling you the whole truth.

A large chunk of our fuel price – in fact a full third of it – is made up of two government taxes: the General Fuel Levy and the Road Accident Fund Levy. For every litre of petrol you buy, R5,30 goes towards these two taxes.

And when you look at all the factors that make up our fuel price, it is these two taxes that have increased far more than anything else in recent years. Over the past ten years the General Fuel Levy has almost doubled, and the RAF levy has more than tripled.

Our neighbouring countries also add a government levy to their fuel price, but nowhere near what we pay. Where ours is R5,30 per litre, Botswana adds around 40c per litre. That’s why petrol in Botswana, Namibia, Swaziland and Lesotho costs between R10,50 and R12,80 per litre while we pay R16.

So no, it is not out of government’s hands. It is very much within their control. And if they refuse to lower this tax, then you have every right to demand answers from them.

In fact, we already know government’s answer to this. It was right there in their press statement earlier this month that announced the latest increase, where they said: “taxing fuel is one of the most efficient instruments of raising revenue for governments”.

They see it as easy money – simple as that. Just add it to the fuel price and everyone has to pay it. No one has a choice.

And it’s not as though these taxes are either ring-fenced or put to good use. The General Fuel Levy simply disappears into the fiscus where it becomes part of the endless bailout of corrupt and failing state companies and projects.

As for the RAF levy, it’s even worse. The fund is basically bankrupt and unable to pay out most claims, but that doesn’t prevent it from being treated like an ATM by corrupt cadres.

It was recently discovered that the RAF was renting office chairs at over R1600 per month per chair, and they were trying to force through an even bigger furniture rental scam.

So when government says “sorry, there’s nothing we can do to lower the fuel price” they are, in effect, asking each and every South African to carry on funding this sort of behaviour.

Their exorbitant fuel levy is simply there to pay for their corruption. Because if you take away the money lost every year to government corruption, we could easily afford to pay a fraction of this tax.

And this is not going to get better any time soon. We’re not going to reach a point where government suddenly discovers how to rid itself of systemic corruption and turn our economy around.

This creep in taxation will continue until there is nothing left to tax, because this is the ANC’s only plan to plug the gaps that are appearing all over our budget.

The longer they fail to kick-start our economy, and the more our money ends up in the pockets of corrupt officials, the more they will increase existing taxes and think of new ones to add.

So today we are here to say to them: No more. Poor South Africans cannot be made to bail out the theft and the failures of this government any longer.

We must have an urgent debate in Parliament on the way our fuel price is made up, and we must overhaul the Road Accident Fund to ensure a clean and transparent operation. But most urgently we must slash the combined fuel levies by at least 20%.

The DA has shown, on many occasions, that it is possible to fund any shortfall through sensible fiscal reform. By trimming our massively bloated cabinet and SOEs, and by making a serious effort to curb government corruption, these cuts are well within our reach.

If we lower the combined fuel levy by 20%, we will bring the fuel price back to below R15 per litre. Which is still high, but it will offer struggling South Africans some relief while we fix the underlying flaws in our fuel price.

The fuel levy, in its current form, is an unjust tax on the poor. We must not rest until it is cut.

Thank you.

Issued by Mmusi Maimane, Leader of the Democratic Alliance, 31 July 2018