Fuel levy hike to pay for e-tolling?

As government scrambles for R5.8-billion to bail out the controversial Gauteng freeway tolling system, motorists will face a hefty 15% increase in fuel levies to provide for the additional funds.

An estimate for 2012-13 fuel levy revenue was suddenly upped from R38-billion in the treasury’s medium-term budget policy statement to almost R43-billion in the latest review.

Finance Minister Pravin Gordhan said additional revenue from the South African National Roads Agency (Sanral) as well as other sources would provide for the tolling system bailout. But the additional R4.5-billion from the levy increase could also go a long way to bailing out Sanral.

On April 4 the fuel levy will be increased by 20c as part of government’s efforts to offset the reduction in toll fees along the Gauteng freeway. The tolling system will come into effect on April 30 and the taxpayers’ R5.8-billion contribution will ensure tariffs for vehicles with e-tags will be 30c/km for light vehicles, 20c/km for motorcycles, 75c/km for non-articulated trucks and R1.51/km for articulated trucks.

The budget also revealed that taxis and other public transport operators would be exempt from tolls on the Gauteng freeway network. A frequent-user cap of R550 a month for light vehicles and motorbikes will be introduced as well as a time-of-day saving of 20% for heavy vehicles.

Latest levy increase out of line with previous increases
The 15% increase on the existing fuel levy, as seen in the Budget Review, is well out of line with previous years where the levy increased by around 8% or 10c per litre.

It appears that government is borrowing forward from future fuel levy increases to fund the project as the proposed fuel levies for 2013 and 2014 fall back down to increases of 2.4% and 2.9% respectively.

Combined with an 8c increase in the road accident fund levy and the expected 25c increase in the petrol price, motorists will see petrol rise by a total of 53c per litre—so you will pay R26 more when you fill up with a 50-litre tank of petrol. Taxes paid per litre of petrol purchased will amount to R2.89 for petrol and R2.74 for diesel.

Chief director of economic tax analysis at the treasury, Cecil Morgan, told the Mail & Guardian the fuel levy revenue is not earmarked and he could not confirm whether the income would go towards the Sanral bailout.

“People can make that inference. It is not an unreasonable inference,” he said. But he noted the fuel levy is an obvious place to look for extra revenue and, even with the increase, the tax burden is still within reasonable bounds—27% of the pump price for petrol as opposed to 31% in 2010-11.

Econometrix economist Tony Twine said it would be difficult to trace the revenue back to Sanral “because the fuel levy disappears into the general fiscus, the precise destination of its spending is unknown. Even if we wanted to argue that it was offsetting the grant to Sanral, there is no forensic link, and treasury could just as convincingly argue that it was helping to support pensions or child support grants. Juxtaposing the two items is interesting, but nobody will ever be able to prove it.”

But funding the bailout through a fuel levy means, ultimately, all South African motorists will be subsidising Gauteng toll road users.

An independent cost-benefit analysis for light vehicle users of e-tolled Gauteng freeways, released this week but prior to the budget speech, found the two highest income earning quintiles in Gauteng would be responsible for 99% of the toll fees paid—regarding light motor vehicles which account for 92% of the traffic on Gauteng’s freeways.

The author of the study and public finance expert, Dr Roelof Botha, disagreed that a fuel levy was a better alternative.

“An increase in the fuel price is regressive.” He said an added cost to the fuel price would affect transport costs and the price of goods far more dramatically than the “user pays” funding model and would affect the poorest of the poor.

The treasury said tolling enables Sanral to construct and maintain a strategic national highway network to standards that cannot be afforded across the entire road system. “Road users benefit through lower vehicle operating costs, improved road safety and time savings. Tolls also contribute, over time, to reducing congestion on major routes,” it said.

Gordhan said options for phase two of the Gauteng Freeway Improvement Project and other toll projects are being assessed.

Lisa Steyn

Lisa Steyn

Lisa Steyn is a business reporter at the Mail & Guardian. She holds a master's degree in journalism and media studies from Wits University. Her areas of interest range from energy and mining to financial services and telecommunication. When she is not poring over annual reports, Lisa can usually be found pottering about the kitchen.
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