The shock price of fuel awaits South Africans as the minister says no to further tax cuts: report

Motorists in South Africa will experience a fuel price shock in June as oil prices continue to rise and the government’s temporary relief on fuel taxes comes to an end.

In April, Finance Minister Enoch Godongwana announced a temporary reduction of the general fuel tax by R1.50 per liter for April and May.

And between calls to extend that temporary relief, News 24 Minister of Mineral Resources and Energy Gwede Mantashe said, stating that the intervention will not be extended beyond the end of May.

Mantashe said the funds raised from the sale of strategic reserves were only enough to finance the reduced two-month levy. “[At the end of May] we must meet the Treasury [see] if there can be anything more we can do, ”Mantashe told the newspaper on Friday.

This would mean that motorists are faced with a scenario of paying up to R3.70 per liter more in June, with the most recent under-recovery in gasoline prices recorded at around R2.25 per liter.

On Sunday (May 22) the Democratic Alliance called for an extension of the fuel tax cut.

“The admission by the Minister of Mineral Resources and Energy, Gwede Mantashe, that the general cut in the fuel tax will not be extended beyond the end of May, is an unacceptable non-compliance and a failure to implement a sustainable rationalization of the composition of the price of fuel.

“Together with Godongwana, they have had two months to consult on whether to extend the fuel tax cut or provide a more permanent solution through a review of the fuel price composition,” the opposition party said.

The fact that they failed to do either demonstrates the government’s lack of urgency in cushioning South Africans from the growing challenges of a free-falling economy, he said.

The DA said it has initiated a process to introduce a Private Members Act (PMB) that would codify, through legislation, fuel price deregulation to encourage competition between wholesalers and retailers.

The PMB will seek to protect the consumer from exorbitant price increases by decoupling the base price of fuel from government taxes and levies and the additional margins used by wholesalers and retailers, the political party said.

“If the projections of the fuel sector operators hold up, motorists should expect a fuel price increase of R3.50 in the first week of June. This would lead to upward pressure on inflation, directly affecting consumers through rising transport and food costs. And these prices don’t come and go like the price of fuel.

“South Africans are already struggling to make ends meet and unemployment is skyrocketing.”

The civil action group Outa also asked the government to extend its temporary relief on fuel taxes. If the government is unable to grant an extension, Outa has suggested that the R1.50 fuel tax be phased in over three months at 50 cents a month as a compromise.

“The high price of fuel has an ongoing negative effect on the economy, affecting a wide range of problems such as food prices and commuter costs,” the group said.

“Maintaining the suspension of the fuel tax for a longer period gives the minister the opportunity to seek greater savings in the public sector and encourage prudent spending habits,” he said.


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