South African Finance Minister Enoch Godongwana (Enoch Godongwana) called for a change in the way South Africa’s fuel prices are calculated because the country’s motorists pay a record high.

In an oral question-and-answer session in Parliament on Friday (December 10), Godongwana stated that he was so concerned about these increases that the government might have to intervene and reform gasoline prices.

Energy Minister Gwede Mantashe confirmed that the government is considering several ways to reduce fuel costs-including separating fuel taxes from basic fuel prices.

"At this time, a large part of the price increase is taxation," he said. "The way to deal with price increases is an issue that needs to be reviewed. This is an issue on the table."

Over the years, civil society groups and trade agencies have been pushing for a review of the country’s gasoline prices—especially specific concerns about fuel price surcharges, which now account for 50% of total costs.

The Parliamentary Mineral Resources and Energy Portfolio Committee held a series of meetings in April to discuss basic fuel prices in South Africa.

The committee then recommended that the Ministry of Mineral Resources and Energy review basic fuel prices, including taxation alternatives.

The South African Automobile Association (AA) submitted a report to Parliament, calling for a comprehensive review of the country’s gasoline price calculations as a matter of urgency.

The AA’s main recommendations to the Portfolio Committee on measures to mitigate rising fuel costs include:

Union Solidarity called on the government to "deregulate" South Africa's gasoline prices by changing the country's existing fuel tax.

The union stated in a letter to Godongwana in November that when diesel retail prices were deregulated, there was a sharp drop in prices almost immediately.

Currently, when imported at 9.37 rand per liter, gasoline is about 20c more expensive than diesel. However, the organization stated that the retail price difference usually exceeds 2 rand per liter, of which 16.66 rand is the lowest diesel price that Solidarity can track—the difference is 2.88 rand per liter.

"As the price of diesel indicates, deregulation is in the public interest. Therefore, we call on the Minister of Mineral Resources to loosen gasoline price controls at the wholesale and retail levels, and to relax diesel price controls at the wholesale level," Du Bison said.

Cosatu, the trade federation, also called for changes to South Africa's fuel prices, including the gasoline price ceiling. The cap will effectively limit motorists’ payment for gasoline in South Africa, and any additional costs beyond this amount will be absorbed by the finances.

“At present, increasing fuel tax will only fund the mismanaged bankrupt road accident fund. The RAF’s deficit of nearly R300 billion is the biggest threat to finances after Eskom’s debt burden.

"We are still waiting for the government to release a research report on the possibility of the Ministry of Energy investigating the possibility of fuel price ceilings," the federation said in August.

Former Energy Secretary Jeff Radebe first proposed the idea of ​​a gasoline price ceiling in October 2018. However, although the department confirmed in April 2019 that it was still considering this issue, it did not communicate further on this issue.

4. Stop tax increases

Outa, a civil society organization, called for the prevention of further increases in gasoline taxes in the February 2022 budget.

The organization stated in a letter to Godongwana in November that fuel tax (FL) and road accident fund (RAF) taxes provide the national treasury with approximately 135 billion rand each year.

Outa believes that the government is deriving sufficient benefits from the society from these two taxes and should seriously consider not increasing these taxes in 2022 in order to cushion the impact of higher-than-inflationary growth in the past.

Wayne Duvenage, Chief Executive Officer of Outa, said: “Instead of imposing higher taxes on citizens every year, it is better to seek savings, productivity and other efficiencies in state government expenditures and processes.”

"A second increase in fuel tax in 2022 will be a slap in the face of overwhelmed citizens and will put more burdens on everyone in the country."

Read: How much tax do you have to pay now when refueling in South Africa