Government must immediately cut fuel levies to save small businesses and ease consumer burden

Issued by Jan de Villiers MP – DA Shadow Minister for Small Business Development
06 Feb 2023 in News

Note to editors: Please find attached soundbite by Jan de Villiers MP.

The ANC’s mismanagement of the load shedding crisis is wreaking havoc on businesses of all sizes. Companies in all sectors have warned of the toll load shedding is taking on their operations as they have to spend money on fueling generators.

The DA therefore calls on government to immediately review its fuel price determination model and scrap the fuel levy to alleviate this undue burden on the business sector, in particular the SMME sector and low-income consumers who are facing a full-blown cost of living crisis.

South Africa has one of the most oppressive fuel tax regimes in the world with a 56% year-on-year increase in fuel prices. This leaves large South African corporations struggling to bear the additional costs of running their generators. One of these is Shoprite, who recently spent an additional R 560 million (R3.1 million per day) during uninterrupted stage 5 and 6 load shedding over the last few months on diesel to keep the lights on.

If large corporations are struggling, how are small businesses expected to survive this crisis since fuel has become an unaffordable luxury.

The ANC administration imposes a devastating 33% tax on fuel prices through various levies, exacerbating inflationary pressures on South Africans, in particular low-income and vulnerable groups. The government regulated fuel price had effectively killed competition and failed to deliver efficient cost-reflective fuel prices.

A retrospective analysis reveals a shocking 425% increase in the Road Accident Fund (RAF) levy, a 225% increase in the general fuel levy, and a 119% increase in the basic fuel price since 2008. These increases have led to a crippling increase in the cost of doing business in South Africa since most businesses have to resort to generators to transact.

Scrapping the fuel levy is therefore not just a matter of keeping the lights on, but it is also about providing a lifeline to small businesses who are taxed into poverty by the ANC government.