The announcement of a further rise in the price of petrol comes as a shock to consumers and especially commuters. A hike of 8 cents a litre on top of astronomical increases in the past 12 months will severely impact upon the budget of ordinary citizens. Already we are being warned of another rise in July!

It is encouraging that the price of diesel is decreasing, but the simultaneous increase in the price of petrol will almost certainly cancel out the positive effects of that relief. Inflation is on the rise and the already exorbitant price of fuel in South Africa is playing a major role in that. This translates to higher costs for consumer products, the Reserve Bank will have no option but to increase interest rates, and then the consumer carries the brunt again!

The effect of Apartheid, the Group Areas Act specifically, has forced the majority of South Africans to commute long distances on a daily basis. The direct social impact of yet another petrol price increase is enormous, especially for poor people.

As much as we sympathise with Government regarding the effects of international crude oil prices on local fuel prices, the UDM continues to believe that Government is overtaxing citizens when it comes to fuel. In this respect Government continues the legacy of an Apartheid tax. The propensity of Government to continuously increase the price of especially petrol leaves the impression that users of petrol are Government's first port of call when more revenue needs to be generated for the state.

Fact of the matter is that we are paying an inordinate amount of tax on fuel, ostensibly in return for certain services. The Road Accident Fund is not only bankrupt, but each successive year it slips a little deeper into the abyss. Are consumers of fuel expected to keep throwing money into this bottomless pit? Another part of the tax on fuel is supposedly import duties, whilst a large percentage of fuel is manufactured locally! Yet another form of tax on fuel is used to subsidise Mossgas and Sasol. Mossgas is another bottomless pit swallowing taxpayers money for little or no return, while Sasol is a successful company privatised 2 decades ago, with profits that run into several billion rands a year.

The taxes on petrol make up nearly half of the price a consumer pays at the pump! In fact just the amount of tax we pay is more than the cost of buying refined petrol in Singapore and shipping it here (including the cost of transport, insurance, product lost to evaporation and import tax)!

Government should revisit the system of fuel taxation in its entirety. South African consumers and commuters deserve better. Government is clinging to the outdated and irrational fuel tax instituted by the former Apartheid government. Government is constantly justifying change and transformation in the name of eradicating the legacy of the past, yet this specific legacy is actively enforced. Perhaps Government thinks that SA consumers and commuters are the goose than lays the golden eggs, and hence the irrationality, or the Apartheid pedigree, of fuel tax is of little consequence, and have the minimum financial or social impact on ordinary citizens?

Dr Gerhard Koornhof, MP
UDM Spokesperson for Finance

03 June 2000