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Fuel price increases to impact consumers

FUEL: Price increase to affect the poor most

Already cash strapped consumers will have to dig deeper into their pockets as petrol, diesel and illuminating paraffin are set to increase by 74c, 91c – 93c and 76c respectively at midnight tonight.

This, coupled with the carbon tax (9c a litre from June 1) and other fuel levies, will hit the workers and poor the hardest.

Toll fees have also increased across the country in the last week.

From April, the general fuel levy will increase by 5 cents per litre, and the Road Accident Fund (RAF) levy by 15 cents per litre.

Economists have cited a weaker rand and the rising price of crude oil for the increase.

Efficient Group chief economist Dawie Roodt said the rise in toll fees by the SA National Roads Agency (Sanral), in addition to the fuel price increase, would heavily impact all South Africans.

“Most freight is now transported by road because of the total collapse of the freight rail network under the stewardship of the Passenger Rail Agency of SA (Prasa). Consumers will bear the brunt of this,” said Roodt.

Debt Rescue chief executive officer Neil Roets said the introduction of the carbon tax and national treasury’s refusal to align the country’s tax brackets with inflation, meant most taxpayers would end up paying more in taxes and less on essentials like food and clothing.

“It is very likely that more motorists will skip paying toll fees because they have substantially less money to spend,” he said.

Roets added the reality was that consumers have now been reduced to buying food on credit.

“While there is still substantial expenditure on luxuries, a growing number of deeply indebted consumers are being pushed into a corner. With unemployment around 27%, key job sectors like mining are continuing to shed jobs at unprecedented rates in 2019. This, despite President Cyril Ramaphosa’s best efforts to turn the situation around,” he said.

Spokesperson for the Congress of South African Trade Unions, Sizwe Pamla said the increases were deeply disturbing.

“Already there are workers who are struggling to feed their families. This is a precarious situation. We may end up back in a recession,” he said.

Pamla said workers had to spend more money on fuel, food and school, and many were losing their jobs because of the ailing economy.

The Automobile Association said the increases would hurt the poor and increase the burden of all consumers.

“We are concerned that these levies are seen as the “go-to” taxes for easy increases by government. The addition of the carbon tax on fuel, is an “easy” tax collection method, which is being exploited,” the AA said in a statement.

It added that consumers currently paid R5.34 towards indirect taxes on every litre of petrol bought, and R5.19 on every litre of diesel.

This comprises R3.37 (petrol) and R3.22 (diesel) for the General Fuel Levy, R1.93 for the RAF levy (for petrol and diesel) and four cents for customs and excise taxes (petrol and diesel).

These levies will now increase by a combined 29 cents for petrol and 30 cents for diesel, which include a nine and ten cent addition for the carbon tax on petrol and diesel respectively.

The South Durban Environmental Community Alliance’s Bongani Mthembu, said the continuous increases have a negative impact on society.

“It is often the poorest of the poor who suffer. Businesses are forced to increase prices and there are increases in travelling costs. Presently, there is a high rate of unemployment in the country and these increases can directly impact on job losses and retrenchments. Government and big businesses do not look at the long term impact when allowing these hikes to continue. This also leads to an increase in crime, stress and depression in the working class,” he said.

“We object to the increases as they are totally unacceptable,” he said.

Head of Information and Marketing at FNB Agribusiness, Dawie Maree, said fuel and diesel are commonly used for tillage, harvesting, machinery and transportation, making them a critical component for both small-scale and commercial farmers, as well as the entire agricultural value chain.

“From a farm producer level, we are currently experiencing a late season, whereby farmers still use a lot of diesel. Furthermore, given that 70% of South Africa’s food is transported by road, the increase in the diesel price will have a negative impact on food inflation,” he said.

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