The South African Chamber of Business (Sacob) says although the announcement of a proposed fuel levy to be implemented in the Western Cape comes as no surprise, the timing of the announcement by the region’s Transport MEC is ”unfortunate.”
Western Cape Provincial Transport MEC Marius Fransman announced the additional levy this week, saying the idea had received approval from Finance Minister Trevor Manuel, according to a report in Business Day.
Responding to the announcement, a Sacob spokesperson said: ”This announcement comes as no surprise, as the issue has been the subject of discussions with the National Treasury for some years. With motorists adjusting to the recent sharp fuel price increase, the timing of the announcement is perhaps unfortunate.”
While Sacob supported the concept of provincial devolution and the fiscal implications it entailed, it said it wished to stress that the economic distortions that will come about through the introduction of regional fuel tax levies must not be underestimated and business trusts that these will be taken into account by the National Treasury in arriving at a decision.
”The practical implications of this fuel levy will prove complex, particularly if there are to be corresponding offsets in the fuel tax already accruing to the central fiscus.
”Sacob trusts that any decision for the adoption of regional fuel levies will be accompanied by appropriate accountability mechanisms,” it added.
The actual figure of the proposed fuel levy has not yet been announced, although various sources have suggested figures of between 10 and 50 cents per litre.
The proposed levy has drawn criticism from various sources, including tourism operators.
Predictions are that the two main income generators and job creators in the province — tourism and agriculture — would be hard hit by higher fuel prices.
Added to the instability of the rand and high international oil prices, this could increase provincial inflation, making it difficult to keep to prices that the industry had already set for next year, Business Day reported.
Trade union Congress of South African Trade Unions (Cosatu), has also criticised the proposed levy with secretary general Tony Ehrenreich saying it would be a tax on the poor, driving up the cost of transport and, down the line, food, the report said. – Sapa