An efficient alternative to e-Tolls

The fuel levy is a surcharge added to the price of fuel and collected at source (from the few petrol supply companies) and paid to Government as a tax.

When the Fuel Levy was introduced in the 1970s, the tax was ring-fenced and allocated to road construction. It made sense that the road users should contribute somewhat to the construction costs of roads, but not all of it, as general taxes should also be used for road construction. It stands to reason that roads are important for any developing economy and that even those who don’t use roads, benefit from the goods they receive, which are transported over our road network.

However, the apartheid Government decided to not ring-fence this levy in 1970s, as they needed more state revenue allocations toward the funds required for the cruel war machine of the apartheid regime.

Today, the levy remains un-ringfenced and all the revenue goes into Treasury’s revenue pot, to be divided and used by Treasury as it pleases.

Today, every time the average motorist replenishes the fuel tank, they contribute approximately around R100 toward the levy. This in turn, swells Treasury’s coffers by close on R60 Billion per annum. Approximately R12,5 billion is given to SANRAL to build and maintain the non-tolled roads under their responsibility and the rest is used for general allocations, some of which goes to the Provincial Governments of which a percentage should be used for roads, which it invariably isn’t.

The Graph further down shows two values:

  • the one being the annual revenues generated for Treasury from the Fuel Levy (now close on R60 Billion per annum)
  • the other, shows the growth in Billions of liters of fuel (Diesel and Petrol) sold

Clearly, the increase in the actual levy charged has been high and has produced a year on year, average increase approximately 13% per annum for the past decade, which is double the inflation rate. This is a situation which requires serious challenging, as the motorist appears to be bearing a heavier brunt of taxation than the rest of society. While some might argue that this is a form of Wealth Tax on the haves (i.e. the wealthier car owning segment of society), which is indeed true, there is a limit to which this segment should be misused for revenues. Secondly, this cost is transferred to society in the form of higher food and commodity prices.

The fuel levy attracts Zero administration fees, whereas the e-Toll collection process is subjected to a fee of over R1,2 billion per annum, and will increase over time. This equates to roughly 30% of the planned full e-toll revenue collected. In effect though, due to low compliance levels, for the first three years of the scheme’s existence, almost the entire e-Toll revenues collected were allocated to the collection process. In other words, for three years, virtually nothing has gone into the “tarmac” bonds.

But here’s the real kicker, if Government had have merely increased the fuel levy by R0.09c per litre in 2008 when the GFIP was mooted (i.e. around 1%), the entire inflated GFIP capital expenditure of R17,9 Billion would have already been paid off by today. The reality is though, they have raised the fuel levy by over R1,25c / litre since 2008 and the increase in the fuel levy since 2008 alone, could have financed 18 GFIP projects, had it been correctly priced at R8 Billion. The fuel levy increase since 2008 could have virtually funded the country’s entire road upgrade and building program, in cash!

Sadly though, Government’s decision to ignore the fuel levy and plough on with an unwarranted e-Toll scheme, has left society poorer, and the Government still fighting to collect sufficient revenues to pay for a road, which could have already been paid off.

This leaves one thinking…


Ave Fuel Levy



























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