The Automobile Association (AA) welcomes the announcement by President Cyril Ramaphosa last night that the Government of National Unity “… will look to expand the basket of essential food items exempt from VAT and undertake a comprehensive review of administered prices, including the fuel price formula, to identify areas where prices can be reduced”.
According to a statement by the AA, the announcement by the President validates
the AA’s calls for a fuel price review to mitigate rising fuel costs which continue
to add pressure on already embattled consumers.
“As far back as 2019 the AA called for a
review of the fuel pricing structure, and an audit of all the components that
comprise the fuel price. We noted at the time that fuel prices impact on all
South Africans and that an assessment of the fuel pricing formula is necessary
to determine whether all components are properly calculated and still necessary
on the current formula.
“While we have been making the call for a
fuel price review in the best interests of South African consumers, little has
been done to initiate such a review. The announcement by President Ramaphosa in
his address at the opening of Parliament last night was therefore extremely
significant and a step in the right direction,” the statement said.
“Fuel prices have increased steadily in the
past five years. In January 2022, for instance, a litre of ULP 95 inland cost
R19.61. In January this year, that same fuel cost R22.49/l. In June, the cost
for ULP95 was R24.25/l, an increase of almost R5 on the January 2022 price.
“Added to this is the inclusion of two substantial taxes on fuel – the General
Fuel Levy, currently pegged at R3.96/l for petrol and R3.84/l for diesel, and
the Road Accident Fund (RAF) levy, currently pegged at R2.18/l for petrol and
diesel. Combined these levies contribute R6.14 to every litre of petrol and R6.02
to every litre of diesel sold in South Africa.
“While we are cautious about simply scrapping
these levies outright, we believe there is room for movement in specifically
the RAF levy portion of the taxes. We also believe a comprehensive review may
highlight other areas within the fuel pricing formula that can be better dealt
with to mitigate rising fuel costs,” the statement added.
The AA says a fuel price review should be
an open process that involves civil society organisations such as itself and
others.
“The President has taken the bold step of
announcing a fuel price review and that process must now unfold quickly.
The
outlook for fuel prices in August is bleak with little or even no relief
forecast. Against this backdrop, and the major role fuel prices play in our
economy and on personal budgets, the fuel price review is long overdue, and our
hope is that it gets underway as soon as possible.”
