Treasury's VAT panel to look into fuel price hikes
National Treasury’s panel of experts investigating zero-rated VAT items will also consider the impact of recent fuel price increases, Minister of Communications Nomvula Mokonyane said at a post-Cabinet briefing on Thursday.
Speaking to reporters in Pretoria, Mokonyane said Cabinet – which met on Wednesday – wished to reassure South Africans that government was working to alleviate the impact of price increases on poor communities.
National Treasury in April appointed a nine member panel of experts to review the current list of VAT zero-rated items. Mokonyane said this panel would now also consider the impacts of the fuel price increase.
The inland price for a litre of 95 octane unleaded petrol rose to R16.02 on Wednesday. The coastal price is R15.43. Prices are expected to increase again in August.
This price hike will have an impact on the prices of transportation, goods, food and paraffin, which many low income households depend on.
The ANC, meanwhile, on Wednesday asked government to freeze the hikes to the cost of petrol, saying they were becoming “unbearable”.
Mokonyane said Cabinet had noted the impact of the fuel price increases during their Wednesday meeting, but reminded reporters that fuel prices were largely determined by the Brent Crude Oil price and the rand’s exchange rate to the dollar.
“These cyclical currency changes, which result in price fluctuations, have impacted negatively on consumers, particularly the poor. The rise in petrol prices directly affects transport costs, food prices and particularly the cost of staple food and medicine,” said Mokonyane.
Asked about the ANC’s statement asking for a fuel price hike freeze, Mokonyane said Finance Minister Nhanhla Nene, Energy Minister Jeff Radebe and Mineral Resources Minister Gwede Mantashe were working together to find an informed solution to the impact of the hikes.
“The ANC comment on fuel price is far from what needs to be done, we believe it should be fundamental that we give the members of the ANC the benefit of knowledge rather than have remarks that are far from reality. Radebe will update the country on the matter,” she said.
She said there was much government was considering in the long term to minimise the South African fuel price’s exposure to international dynamics, such as developing South Africa’s own fuel production capacity. — Fin 24