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Fuel tax quagmire

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The second option would be to cut expenditure. But what do you cut? Health? Education? The police?

Picture: Thobile Mathonsi/African News Agency/ANA

THIS financial year South Africa expects to collect about R1.5 trillion in taxes. Unfortunately, South Africa spends a lot more than it earns. In the current financial year, we will have to borrow about R180 billion to make ends meet. The shortfall could have been a lot bigger had we not increased taxes.

According to calculations, it was expected that the increase in the general fuel levy as well as in alcohol and tobacco excise duties would bring in an additional R2.6 billion this financial year.

The fuel levy – now at R3.37/litre – is under increasing focus because of the record price we are paying for fuel. The projected revenue from the fuel levy this financial year is R77.5bn.

This year alone there have been four hikes four months in a row, with the price for some brands of petrol now exceeding R16/* inland for the first time.

However, those who are advocating a drop in the fuel taxes are not saying just how we will fund the resulting shortfall in the fiscus. A R1/* reduction in the fuel levy will impact Treasury’s income by about R23bn a year.

There are only two options available. The first involves raising other taxes. VAT went up this financial year from 14 to 15%. Would those advocating for lower fuel prices call for VAT to be increased to 16% to make up the revenue shortfall? Would they prefer personal taxes or business taxes to go up?

The second option would be to cut expenditure. But what do you cut? Health? Education? The police?

It would be great if we could reduce corruption, but there is no budget for corruption. There are many failures our government must take responsibility for. But, in all fairness, the price of petrol is something the government has very little control over.

So, while the DA and the Organisation Undoing Tax Abuse (Outa) can hold as many marches as they like, they are not going to make any impact on the rand or on international oil prices. And it is these two factors that play the biggest role in determining how much we pay at the pumps.

The same is true of Visvin Reddy and his organisation, People Against Petrol and Paraffin Price Increases. In June Reddy urged motorists to wear black and to switch off their car engines for 10 minutes. Despite all these efforts, the price of fuel went up once again yesterday. It proves just how ineffective the current line of protests has been.