Jul 05, 2024 MISA, the Motor Industry Staff Association, Martlé Keyter, Department of Mineral Resources and Energy, fuel review
MISA Comment - Department dragging its feet on fuel review
The Department of Mineral Resources and Energy has failed to establish a committee to review South Africa’s fuel pricing methodology for the past two years. MISA, the Motor Industry Staff Association, was invited to participate in the promised committee by Mr. Raphi Maake, Senior Manager in the Department, in July 2022. Since then, nothing has happened.
Maake did not attend a meeting of the Rapid Response Task Team Cost of Living of Nedlac, the National Economic Development and Labour Council, where he was supposed to give feedback this week. He said earlier, that the Department had approached National Treasury for funding for the fuel pricing methodology review. This request was denied by National Treasury, who responded that the Department must find the money in its existing budget.
Martlé Keyter, MISA’s Chief Executive Officer: Operations, says that in the meantime, South Africans are continuing to pay sky high fuel levies and taxes, just because it is an easy source of income to collect. From 1 May 2024, R6. 40 per litre goes towards some form of tax or levy when buying petrol. This is predominantly made of the fuel tax -roughly 18% of current prices, and the Road Accident Fund (RAF) - approximately 10% of current prices.
Keyter says that government expects to make around R89 billion from the general fuel levy in the current financial year, adding to the over R730 billion it has generated in the past decade. MISA approached the Department more than two years ago, because the Union believes the skyrocketing fuel prices contribute to the ongoing dire economic situation.
“In the retail motor industry, new vehicle sales fell substantially in June by 14% to 40 072 units, compared with the same month a year ago, as the ongoing downward slope in the market that started last August, has continued. The South African Reserve Bank (SARB) held the repo rate unchanged at a 15-year high of 8.25% since May 2023. This resulted in a weak economy, where households can’t keep up with the increasing cost of living. Affordability is the decisive factor when customers want to buy a new vehicle,” says Keyter.
The Union believes that less taxes on the fuel levy and an overall lower fuel price, will result in positive economic growth and job creation to combat the unemployment rate of 33%. MISA fears that the merging of Departments in President Cyril Ramaphosa’s Government of National Unity will cause even more delays in the review of the fuel pricing methodology. Ramaphosa decided to merge the Ministries of Electricity and Energy. It is believed that the Department of Mineral Resources will only be responsible for mining and petroleum resources now. It is unclear under which Department the review of the fuel pricing methodology will fall.
“Our dire economic situation requires swift responses. We can’t waste another two years. South Africans need to know if the high fuel levies and taxes can be justified. We want to be a part of the solutions to find another source of income for the Government, other than fuel. At the moment, it seems that this is the only reason why reviewing the fuel pricing methodology is not being taken seriously,” says Keyter.
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