BL Premium reports that in anticipation of a huge fuel price increase, Finance Minister Enoch Godongwana has proposed a two-month extension of the reduction in the general fuel levy at an additional cost of R4.5bn that has not been fully funded.
The proposal was contained in a letter Godongwana submitted on Tuesday to the Speaker of the National Assembly. The original relief, which was announced at the end of March and implemented in April, was due to expire at midnight on Tuesday, which would have left SA motorists facing an increase of about 25% to over R25/l for petrol. Unlike the R6bn sacrificed by the state during the initial tax holiday, the government said the sale of strategic fuel reserves would not be enough to cover the cost of the extension, implying an impact on the budget either through raising extra revenue or cutting spending elsewhere. The Treasury said, without providing any details, that the latest temporary reduction in the fuel levy would be accommodated in the current fiscal framework “in a manner that was consistent with the fiscal strategy” as outlined in the February budget. Changes, if required, would be announced in the 2022 medium-term budget policy statement. The government could be counting on corporate tax revenue from industries such as mining coming in better than anticipated to fill the gap. But, it remains a question what the government will do if prices stay elevated as political pressure will build for the “temporary” relief measures to become permanent. That in turn, would risk long-term damage to finances that are recovering after the Covid-19 outbreak and lockdowns.
- Read the full original of the report in the above regard by Denene Erasmus at BusinessLive (subscriber access only)
- Read too, As fuel-levy reduction is extended, government warns of R4.5bn fiscal hit, at Mining Weekly
Get other news reports at the SA Labour News home page