Get more Mail & Guardian
Subscribe or Login

Ramaphosa downplays hope of a quick fix for high fuel, VAT

President Cyril Ramaphosa has given ministers in the economic cluster a two-week deadline to come up with measures to ease the burden of high fuel prices and the VAT hike on already struggling consumers.

However he was careful not to raise hopes of a quick solution, indicating that government’s options are limited. “We know this matter is urgent and I wanted it to be attended to as quickly as possible … without raising anybody’s hope I am saying there will be an interim report that they will give me,” Ramaphosa said.

“Economic cluster ministers will look at all options including the basket of products our people buy most, to see the extent with which we can extend non-vatable products. We obviously cannot temper much in the end where it impacts on the budget and tax legislation that is out there,” he said. Ramaphosa was speaking to journalists after he concluded a three-legged visit to the oil-producing countries of Nigeria, Saudi Arabia and the United Arab Emirates.

His administration is facing pressure from consumers buckling under a combination of historically high petrol prices and the one percentage point increase in the value-added tax (VAT) rate, which is expected to contribute to higher food prices.

READ MORE: Brace yourself for tougher times

City Press reported on Sunday that Ramaphosa might also be strong-armed into revising sections of the Budget delivered by former Finance Minister Malusi Gigaba in February. Alliance partners Cosatu and the SACP have criticised the VAT hike and high petrol prices for impacting consumers, especially the poor. Political parties have called for government to increase petrol reserves and consider freezing or decreasing the fuel levy.

Rising fuel prices

During this trip Ramaphosa discussed the global oil price with his counterparts. In particular he urged Saudi Arabia — which provides South Africa with 47% of its oil — to increase production in a bid to arrest soaring fuel prices. “They [Saudi Arabia] are a major exporter to our country and the world. They want to continue to increase production, we will see what it does at the end,” Ramaphosa said.

“People must understand we are very concerned on the impact of fuel prices on our people. We are price takers, we have to buy at price they are selling.”

South Africa’s record petrol price — which breached R16 a litre in inland areas for the first time July — has been caused by the combination of a weaker rand, higher global oil prices, and higher fuel taxes. A year ago benchmark Brent Crude was about $47 per barrel. On Sunday evening it was trading at $75.33/bbl.

Investment pledges

Ramaphosa rounded off his visit with Saudi Arabia and the United Arab Emirates each pledging $10-billion in investment, part of the president’s ambitious drive to attract $100-billion (about R1.33-trillion) in new investment over five years to help kick-start the struggling economy, that saw record unemployment rates and deepening poverty under his predecessor Jacob Zuma.

Ramaphosa said bot countries were serious about investing in South Africa, with Saudi Arabia looking to build an oil refinery. “It will have the bells and whistles of new technology [and] will also have the downstream effect of the petrochemical products that a refinery can produce. That already demonstrates a level of seriousness,” he said.

Under Zuma there were complaints that economic agreements reached were not implemented, while state-owned entities could not deliver on promises due to lack of capacity.

“We are not playing around. We are serious. This is about the growth of our economy and we are extremely serious about being businesslike, being focused and ensuring that we drive economic growth,” he said.

Ramaphosa is expected to host a major investment summit in October. — Fin 24

Subscribe for R500/year

Thanks for enjoying the Mail & Guardian, we’re proud of our 36 year history, throughout which we have delivered to readers the most important, unbiased stories in South Africa. Good journalism costs, though, and right from our very first edition we’ve relied on reader subscriptions to protect our independence.

Digital subscribers get access to all of our award-winning journalism, including premium features, as well as exclusive events, newsletters, webinars and the cryptic crossword. Click here to find out how to join them and get a 57% discount in your first year.

Mahlatse Mahlase
Mahlatse Mahlase works from Jozi. Group Editor-IN-Chief EWN : [email protected] Mahlatse Mahlase has over 36181 followers on Twitter.

Related stories


If you’re reading this, you clearly have great taste

If you haven’t already, you can subscribe to the Mail & Guardian for less than the cost of a cup of coffee a week, and get more great reads.

Already a subscriber? Sign in here


Subscribers only

Data shows EFF has lower negative sentiment online among voters...

The EFF has a stronger online presence than the ANC and Democratic Alliance

Hawkish Reserve Bank sees South Africa edge towards a rates...

Analysts say the Reserve Bank could start tightening monetary policy as early as next month

More top stories

Data shows EFF has lower negative sentiment online among voters...

The EFF has a stronger online presence than the ANC and Democratic Alliance

Greenpeace investigation exposes countries trying to dilute climate report

Greenpeace team says it has obtained leaked records of countries asking scientists to water down upcoming scientific report on climate change

Zondo responds to Fraser’s objection to his nomination as chief...

The deputy chief justice said all the former spy boss had to do to respond to bombshell testimony implicating him in state capture was to apply for a turn to testify

Immunocompromised finally prioritised for Covid-19 booster shots

Organ recipients are at greater risk of death from Covid-19, while waiting lists for transplants grow

press releases

Loading latest Press Releases…