Implementing a "Special Tax" could reduce petrol prices in South Africa

Mbazima Speaks
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South Africa's government could reduce petrol prices by imposing a special tax on monopoly companies to make up the fuel levy shortfall, which could lead to a price reduction of around R10 per litre. The People Against Petrol and Paraffin Price Increase's (PAPPI) Visvin Reddy suggested several solutions to address the unaffordable prices that the government is not pursuing. South African motorists are now paying almost R26 per litre to fill up their cars following an increase on Wednesday, 4 October, with the cost of diesel and petrol climbing between R1.08 and R1.97 per litre.

Fuel prices have increased significantly since the start of the year, with petrol prices increasing by 20% and diesel by 17.7%, despite consecutive cuts in the first half of 2023. Inland 95 octane petrol costs R25.68/l, while at the coast it costs R24.96/l, factoring in the slate levy and other costs. Diesel 0.005% will cost R25.22/l, while at the coast it costs R24.53/l.

PAPPPI believes that these higher-than-expected fuel increases are catastrophic for all South Africans, as they mean that when fuel prices go up, especially the price of diesel, it means that food prices, the cost of living, everything goes up. South Africa has what it needs to reduce petrol prices, but it heavily relies heavily on imported supplies. Reddy cited India as an example of how local governments can reduce the impact of oil prices on fuel costs.

South Africa is a fuel-producing nation, but it still relies heavily on imported supplies. According to Reddy, this dependency is unnecessary. Fuel prices in South Africa are also disproportionately high compared to other countries that buy locally-made fuels, who enjoy lower rates than what South Africans have to pay. Ramping up production at Sasol and re-commissioning many of the refineries that closed their doors in recent years will assist in meeting the demands of local motorists at a much lower cost than importing fuel.

There are concerns that the government would lose a significant amount of the R95 billion revenue it receives from the general fuel levy, which is currently used to fund public services. PAPPPI suggests that the government could consider other alternatives to maintain its finances, such as a special tax on the monopoly industry that sits on the Johannesburg Stock Exchange (JSE).

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