STRAIGHT TALK
27 May 2022
On Wednesday, the government is planning to increase the price of petrol by around R3.80 per litre, to an outrageous R25 per litre. As we did with the R22 million flagpole plan, South Africans need to put our national foot down and say a firm NO.
It’s high time to heed the Chinese proverb that says the best time to plant a tree was 20 years ago, the second best time is now. The best time to push back against South Africa’s inexorable petrol price hikes would have been a decade ago, when it began its swift climb from R11 per litre. The second best time is now.
A petrol price increase will take food prices up with it because the price of food includes the cost of transporting it to shops, and all our food is transported by road now that South Africa’s rail system has collapsed.
As it is, millions of South Africans are already going hungry, and things are about to get a lot worse. Russia’s invasion of Ukraine, China’s covid lockdowns and the impact of climate change are reducing the supply and increasing the cost of food and fertilizer globally.
Russia’s blockade of the Ukrainian port of Odessa is trapping 25 million tonnes of grain, equivalent to the annual consumption of all the world’s least developed countries. Many countries have put export blocks on grain to protect their own supply.
At the same time, South Africa faces multiple domestic crises, where 46% unemployment, stage 4 load-shedding, floods in KZN, drought in the Eastern Cape and collapsing service delivery are already making it hard for millions of households to put food on the table.
State-owned Foskor, which has historically produced 80% of SA’s fertilizer needs locally is only managing to produce 20% now, due to the same cadre-deployment-induced mismanagement that has blighted other state-owned companies.
This week, Tiger Brands, South Africa’s largest food manufacturer warned that prices for some basic food categories such as bread, maize meal and baking flour will rise by 15-20% in the coming six months.
All in all, government’s plan for a massive petrol price hike next week is terribly timed. It will push millions more into poverty and hunger, risking violent riots as seen in Sri Lanka recently in response to exorbitant fuel price hikes there.
South Africans cannot afford this price hike and shouldn’t accept it. A full one third of the price of petrol goes to government as taxes and levies. Petrol in Swaziland, Mozambique, Botswana, Tanzania, Namibia and Kenya is on average about R5 cheaper per litre, because their governments don’t tax it as much. The South African government can do something to lower the fuel price in South Africa, it just chooses not to.
The DA has put a plan on the table to slash fuel prices and we’ve successfully requested a debate of urgent public importance in the National Assembly to get the ball rolling. There are three elements to the plan.
1. Scrap the General Fuel Levy
The General Fuel Levy of R3.93 per litre is little more than a corruption tax. Road users are effectively reimbursing National Treasury for taxpayer funds lost to corruption and wasteful expenditure. By cutting wasteful expenditure on luxuries like catering and entertainment, VIP protection and vehicles, and by uprooting state capture corruption that has cost South Africa at least R1.5 trillion so far, the General Fuel Levy of R3.93 per litre can be scrapped entirely.
2. Give exemptions to the RAF Levy:
Through a SARS tax rebate, government should exempt those who already pay for comprehensive third party insurance from the RAF levy. This includes bus, taxi and transport companies, and private commuters. This would free up the RAF from claims for those drivers and save those drivers another R2.18 per litre, who would get this back as a tax rebate from SARS.
3. De-regulate the Fuel Price:
The cost of fuel can be further reduced by deregulating the fuel sector to spur competition between sellers, as per the DA’s pending Private Member’s Bill.
The forces of market competition among fuel sellers, in a market for 11 Billion litres of fuel a year, would naturally drive down prices as they compete for business. Like any other consumer good, it is only reasonable that the same market competition determines the final price at the pump.
To this end, the DA has a Private Members Bill going before Parliament soon to de-regulate the Fuel Price. We call on all Parties to support this.
The DA will pursue every available avenue to prevent the upcoming rise in fuel prices and to slash fuel prices going forward. We will fight this fight on behalf of every South African battling to make ends meet, because we care about their plight.
Warm regards,
John Steenhuisen
