The Automobile Association says it is “dismayed” by the increases to the general fuel and road accident fund levies announced by finance minister Tito Mboweni during the annual budget speech.
Mboweni announced a combined 25-cent increase to the two main fuel levies: 16 cents will added to the general fuel levy (bringing it to R3,63 on every litre of fuel) and nine cents will be added to the road accident fund levy (taking it to R2,07 on every litre of fuel). This means, the AA points out, buyers will pay R5,70 towards these two taxes alone, or around 35 to 40 percent on every litre of fuel.
The increases come into effect in April 2020.
“We acknowledge that revenue must be collected towards the fiscus, and the difficult decisions the minister had to make in preparing this budget. However, as we pointed [out] earlier, the increases to the fuel levies will hurt the poorest of the poor hardest, and will make transport costs that much more expensive for many who rely on transport daily to earn a living,” the AA said in a statement.
The AA added the increase the levies had the potential to be “dangerous and damaging”.
“These increases will invariably be reflected in increases to public transport and taxi fares. For those in our country who count each cent to get by each month, this is extremely worrying. The financial impacts of the increases cannot be underestimated and we are concerned about how this will impact on these citizens,” it said.
While the Association welcomed the decision not to increase VAT, it said another area of concern was the “reduction in spending on transport, particularly public transport spending which will decrease by R13,2-billion over the next three years”.
“Access to public transport is access to a job, education, healthcare and so many other critical services. To reduce spending on public transport – which is already inefficient and unreliable – will make it even harder for many to improve their lives. Curiously, this comes at a time when our country is experiencing its highest unemployment rate ever. In our view spending on public transport should have increased considerably, not decreased,” said the AA.