South Africa gets a petrol price decrease as it increases, thanks to a tax holiday

If you’re a South African, you know that the cost of visiting the petrol pump has you considering buying a horse. There’s another petrol price increase due in a matter of days. Before that happens, the South African government has a little respite in store for the country.

From 6 April — so next Wednesday, when the petrol price is likely to go up — South Africa’s fuel levy will be dropped by 40%. This tax break will remain in effect until the end of May. SA’s finance minister Enoch Godongwana made the announcement while addressing parliament on 31 March.

So the petrol price is dropping?

Well… ‘dropping’ is a strong word. Minister Enoch Godongwana confirmed that the general fuel level will be temporarily trimmed by 40%. That’ll drop the amount the levy scrapes off every litre of petrol and diesel by R1.50. The effect will be to cut fuel prices overall by R1.50 a litre. But…!

For most of the month of March, petrol costs in South Africa were expected to increase by R2/litre or more. Even with a revised outlook that predicts petrol ‘only’ increasing by about R1.84/litre, the government’s intervention will still lead to a minor price increase for the month of April. In the region of 35 cents (petrol) to R1.50 (diesel), if current predictions stay on target.

Godongwana also said that the government was considering several other measures that could lower fuel costs. A reduction of the Basic Fuel Price (by 3c/litre), cancellation of the  Demand Side Management Levy (10c/litre) for petrol sold inland, a cap on the price of 93 octane petrol that could lead to lower prices, and an examination of how the Regulatory Accounting System could offer further adjustments are all being considered.  These would be implemented after the general fuel levy break concludes.

Source: BusinessTech