Government's anti-poor fuel levy suggestions is futile
“If this is indeed so, then government clearly has no regard for the poor, as they have increased the fuel levy in real terms, by 109% over the last eight years, “ says Wayne Duvenage, OUTA's Chairperson. “In 2008, the fuel levy pumped R23,7 billion into government’s coffers. This tax year, the fuel levy is estimated to generate around R55 billion. If government was true to their concern about the fuel levy’s impact on the poor, why do they raise this levy well above inflation every year?”
This inexplicable rationale is evidence that government is prone to speaking on matters when it suits them, yet their behavior is contradicts what they say.
Government’s monotonous claim that the user-pays principle is being applied justly through the introduction of e-tolls, suggests that e-tolling is the only user pays scheme in town. Yet government’s existing user-pays-fuel-levy policy has been in place for decades and is the most efficient user-pays mechanism to extract funds from motorists.
When comparing the excessive e-toll collection costs of over R1 billion per annum (before the bonds are paid), against administration costs of ZERO for the fuel levy, one questions the logic of government’s pro-poor argument for the e-toll scheme. Respected economists have also argued that the e-tolls charges will have a far greater impact on the cost of consumer goods, than a rise of 10c per liter to the fuel levy, this being the amount that would have already settled the capital cost of the freeway upgrade, were it applied when the freeway upgrade started.
Government’s only argument against the use of the national fuel levy for Gauteng’s freeway upgrade, is that it might penalize motorists in other parts of the country. This however, is a futile argument as the taxes and fuel levies generated in Gauteng, are paying for the roads and infrastructure needs of the other provinces.
“There has been no user-pays toll scheme applied to the upgrade of urban roads in any other region throughout SA over the past decade, so why the discrimination against the most cash-positive province, which props up the other regions?” asks Duvenage. “The continued irrationality of government’s decision to cling to the failed e-toll scheme leaves the public to speculate as to what the real motives behind this costly, inefficient and unworkable scheme are.”