Chair proposes scrapping of RAF tax from petrol price

Chair proposes scrapping of RAF tax from petrol price

The Mineral Resources and Energy Committee of Parliament has suggested that the government eliminate the Road Accident Fund (RAF) tax charge on gasoline sales.

According to the portfolio committee, the only important area where rapid relief is conceivable is gasoline taxation.

This comes as South Africa has seen “unsustainable” fuel price rises that have hit an all-time high.

Currently, motorists in coastal areas pay R20.88 per litre of gasoline, while those in interior regions pay R21.35. R2.18 of that money goes to the RAF.

According to committee chairperson, Zet Luzipo, those hardest hit are public transport commuters who rely on taxis to get to work and collect social grants.

Speaking during the committee meeting on Tuesday, Luzipo proposed tax exemptions on all matters relating to fuel products.

“As an emergency, the minister of finance [should] consider tax exemptions on all fuel products. We’re dealing with a crisis, we’re dealing with an emergency. What we have, as much as, it’s only a projection of two months… we could be in a much worse situation than we are right now.

“We should be bold enough. Both ministers, the minister of resources and energy and the finance minister, should and must consider moving RAF out of the department when it comes to fuel,” he said.

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Luzipo said fuel increases had long been on the agenda for the portfolio but had now been compounded by the conflict between Russia and Ukraine.

Russia is the third top producer of crude oil and supply worries are seen in increased oil prices, the association pointed out.

“Fuel hikes are reaching almost crisis levels. At the time, it dealt with fuel hikes within the rise in commodity prices, now we’re confronted with a new crisis, which is the conflict in Eastern Europe.

“We all know the actual consequences of fuel hikes, but the person who feels it is that individual who is collecting Sassa and can’t afford taxi fare. We need to find a solution to save them from the worst ever situation,” he said.

Last year finance minister Enoch Godongwana called for changes to the way the fuel price is calculated.

According to the department, another recommendation to ease the burden on the consumer was to scrap or waive VAT, an idea proposed by the South African Petroleum Industry Association (Sapia).

The report, tabled and discussed during the meeting said: “According to Sapia, the only realistic area for adjustment in the fuel structure, in the short term, is on fuel levies and RAF. Moreover, Sapia stated that both the illuminating paraffin and the liquefied petroleum gas (LPG) prices are regulated by the minister of mineral resources and energy.

“Sapia argues that there is VAT built into the price of LPG, thus for immediate relief, reducing VAT or waiving VAT in its entirety could be considered. On the other hand, there is no VAT nor levies applied to illuminating paraffin. Thus, specific considerations are required for illuminating paraffin directed only at poor consumers.”

DA MP James Lorimer said the proposals put forward did not have any timelines attached to them.

“I’m concerned with the lack of timelines. I’d like to know whether we can put into recommendations about the department giving progress on the upskill of the petroleum bill,” he said.

ANC MP Thokozile Malinga said the scrapping of the RAF tax would cushion motorists but questioned if it would need public participation or a cabinet approval.

“I think scrapping R2.18 would go a long way. Can we just scrap it without having any other tax to replace it with,” she said.

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