A new fuel tax without clarity is unacceptable

The Organisation Undoing Tax Abuse (OUTA) is concerned that government has introduced a new tax on fuel (referred to as a carbon tax) at 9 cents per litre on petrol and 10 cents per litre on diesel which comes into effect on 5 June 2019.

This new tax will impact on individuals and the transport industry, pushing up the price of consumer goods along with the other fuel levy increases.

“Tackling climate change is an imperative that requires urgent action,” said Heinrich Volmink Executive Head: OUTA National Division.

“However, introducing a carbon fuel levy without a clear indication that this will be ring-fenced for climate change mitigation initiatives, and with no clear link to behavioural change, appears to be disingenuous.”

 Just as the plastic bag tax has not changed consumer behaviour or reduced pollution and the funds were not used for recycling initiatives as initially promised, this carbon tax on petrol will just be another revenue stream for government’s coffers.

We are concerned that the expenditure ceiling was not revised downwards significantly, instead going up by another R16bn over the next three years. Although this takes into account the unplanned R69bn help for Eskom, it is a worrying indication that Government is not doing enough to reduce unnecessary spending and losses due to corruption and maladministration. This ceiling used to be the primary fiscal anchor and it is no longer adhered to.

Furthermore, the tactical delay in reconfiguring the SOEs means that more money will be lost while the new chief reconstruction officers are installed and take time to make much-needed plans for change.

“One of the positives is that Minister Mboweni has changed his narrative on the e-toll issue, from a hard ‘e-tolls is here to stay’ stance last year to a clear indication that negotiations for solutions to resolve the e-toll matter are on the cards,” says Wayne Duvenage, OUTA CEO.

“We look forward to engaging with the various authorities to find a solution to the e-toll system which has failed since its inception. While he does say that the user-pay principle should be borne in mind when finding a solution, OUTA points out that e-tolling is a failed user-pay scheme and that the fuel levy is a very efficient user-pay alternative. We believe this softened stance may be a result of this being an election year and that sanity is starting to prevail on the failure of e-tolls.”

OUTA is alarmed to hear that the clean up of the Vaal River is now under threat, due to the failure of unnamed government departments to hand over agreed-on funds to the SANDF. The clean-up is needed due to the collapse of the Emfuleni sewerage system and is estimated to need about R1bn. This is an indication of Government incompetence, in the face of an urgent environmental and health disaster which will not simply go away.

“We call for an immediate solution to the funding needs for the Vaal clean up,” says Michael Holenstein, OUTA’s Manager for Local Government.