The extension by National Treasury of the temporary reduction in the general fuel levy of R3 per litre into May and June this year and slashing the diesel levy to zero (as of 6 May) has delayed possible protest action about the tax on fuel.
Automobile Association (AA) CEO Bobby Ramagwede told Moneyweb in an exclusive interview on Tuesday – ahead of National Treasury’s announcement about the extension of the relief measures – that “coordinated non-violent silent protest” about the tax in the fuel price was planned if these measures were not extended.
Ramagwede said the AA would have been driving the protest action – which would involve people parking in the street and getting out of their cars – with the support of several national associations.
He said there are industries that cannot afford the fuel price to become unmanageable, including bus and taxi operators as well as tow-truck operators.
“We are not throwing punches, we are not pulling out guns. This is a demonstration to show government and the economy that this is material,” he said from China, where he is on a business trip.
“This not a threat of a violent protest but we are capable and prepared with our partners to bring things to a grinding halt in order for that message to be heard correctly.”
Extension of relief measures
National Treasury and the Department of Mineral and Petroleum Resources announced the extension of the relief measures late on Tuesday afternoon.
The aim is to provide further limited short-term relief to households from rising fuel prices following the Middle East conflict and address concerns of higher inflation and negative impacts on economic growth.
Minister of Finance Enoch Godongwana said the current temporary R3 per litre reduction in the general fuel levy for petrol will be extended until Tuesday 2 June.
He said the temporary relief for diesel will be increased by 93 cents to R3.93 per litre – reducing the levy to zero – from Wednesday 6 May to Tuesday 2 June because of the large expected increases in the price of diesel.
Godongwana has proposed that the relief then be halved and phased out before July.
This means that from 3 to 30 June:
- The relief on petrol will drop to R1.50 per litre (from R3.00)
- The relief on diesel will drop to R1.96 per litre (from R3.93)
National Treasury stressed that the relief measure is designed to be revenue neutral and will be funded through a combination of higher-than-expected tax revenue and underspending and will not have an impact on the fiscal framework adopted by parliament following the tabling of the 2026 Budget.
AA to keep an eye the relief (rather than the fuel price)
Ramagwede said on Tuesday that any decision on whether or not to embark on protest action would depend less on what the May fuel price increase is and more on whether Godongwana “makes the necessary adjustments to the taxes”.
The taxes that form part of the fuel price are the carbon emissions tax, the general fuel levey, and the Road Accident Fund levy.
Ramagwede said it was easy for Godongwana to isolate the general fuel levy in April because it goes into a pot and does not have any real allocation.
“I call it the backstop for all the theft in the country.”
Ramagwede stressed that South Africa’s economy is acutely sensitive to movements in the fuel price.
“As fuel prices drop, general prices don’t follow but as fuel prices increase, general prices increase,” he said.
“If we continue introducing sustained increases in fuel prices, we are going to systematically or fundamentally shift the price base in the economy, creating an even bigger problem of a downward spiral.”
Organisation Undoing Tax Abuse (Outa) CEO Wayne Duvenage said the extension of the temporary relief measures is not surprising but will hurt government finances, adding that R17 billion is going to be clawed back but that it is very necessary.
Duvenage was particularly pleased that government is increasing the levy relief on diesel because diesel is harder hit than petrol and has a more inflationary impact because of its use in the transport of goods.
“The only way the government can provide relief is through the levies, which have grown over time,” he added.
Duvenage is critical of the government’s management of the country’s strategic fuel reserves, which he believes only amounts to about two weeks of the country’s needs – and should be depleted it will then wait for an opportune time in the future to buy oil cheap and restock meaningfully.
“Government hasn’t managed our fuel stock reserves properly for the medium or long term in the way it is supposed to,” said Duvenage.
“That is why you have these reserves to cushion the blow of a situation exactly like this. You could ease the pain the country has been going through.”
Duvenage says the government also needs to become absolutely transparent and tell the country what the fuel reserve level is, and what its strategy and plan is.
This article was republished from Moneyweb. Read the original here.
