The Democratic Alliance (DA) said that government should scrap the general fuel levy completely to ease the impact of the record fuel price increases on motorists.

Petrol and diesel are expected to increase from Wednesday, with petrol reaching an unprecedented R25 a litre.

It also looks like there is no relief in sight for motorists and government hasn’t indicated any interventions.

DA mineral resources and energy spokesperson Kevin Mileham said scrap the general fuel levy completely.

“That’s about R3.93c per litre. The reason why we say scrap that completely is because that general fuel levy goes into the national revenue fund and gets used to fund anything that government does from buying a flagpole for R22 million to aR50 million donation to Cuba,” Mileham said.

Meanwhile, the DA said that it would protest in seven provinces across the country on Tuesday against the pending fuel price hike and to reject the government’s abuse of fuel prices.

With huge fuel price hike looming, South Africans waiting for govt move on levy

There have been mounting calls for the fuel levy to be scrapped as South Africans battle to make ends meet.

JOHANNESBURG- Government is still looking at its options as the country faces a petrol price crisis with an increase of around R3.80 a litre taking the price to aboutR25 a litre.

The fuel levy was decreased by R1.50 two months ago, but this was only for a limited period.

There have been mounting calls for the fuel levy to be scrapped as South Africans battle to make ends meet.

But chief economist at Stanlib, Kevin Lings, said that it was not as simple as that as government can't just lose that revenue.

"The fuel levy collects about R90 billion a year for government. So, where does government get that R90 billion from?" Lings explained.

But he said that government needed to do something to help South Africans: “Undercurrent circumstances, it would be wise to try and ease the pressure consumers are under right now,” he said.

With high fuel prices, comes higher inflation and then higher interest rates. South Africans are waiting to see how government will handle what many are calling the fuel price crisis.

KNOCK-ONEFFECTS

There are concerns that the fuel price increase will have devastating secondary effects.

Economists agree that if fuel prices continue to increase drastically, then so will inflation, which will be followed by rate increases.

Lings said that this could have serious knock-on effects as unions and workers will see them demand double-digit wage increases.

"I suspect that as we go over the next couple of weeks or months, you are going to see more demands for salaries in double digits. Under current circumstances, that's difficult for many companies to afford and so what they'll do if they are forced to give higher wage increases, they'll start to look to cut costs elsewhere."

With the war in Ukraine and other pressures keeping oil prices high, government will need to look for long-term solutions.

Ray White

Babalo Ndenze

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