South Africans can be shielded from fuel price increases if fuel levies are halved, according to the DA.

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The DA is demanding a 50% reduction in fuel levies as of April to shield South Africans from the impact of the US-Israel war on Iran.

The party says it has submitted its “urgent” proposal to Minister of Mineral and Petroleum Resources Gwede Mantashe, as well as to President Cyril Ramaphosa.

According to DA spokesperson on finance, Dr Mark Burke, the looming R6.35 of combined fuel levies that will come into effect on 1 April, following a 21c per litre increase, should be reduced to R3.17 for “immediate and sensible relief”.

With only two more days of the oversight month for April’s fuel prices remaining, Central Energy Fund data now indicates an increase of R5.72 per litre for 95-octane petrol, R9.67 per litre for diesel with 0.05% sulphur (the wholesale increase), and an R11.42 per litre increase for paraffin.

Adding the 21c per litre budgeted annual increase in levies would bring the petrol price increase to R5.93 per litre and R9.88 per litre for diesel.

Burke concedes that a temporary halving of the levies would cut about R6.5 billion a month from tax revenue and Road Accident Fund funding, according to DA calculations. “This is not insignificant, but doing nothing would hit the South African economy even harder,” Burke said.

“It’s possible for the government to recover these lost funds without new taxes and without new debt,” he emphasised in a media briefing on Wednesday.

Burke outlined four channels of revenue to finance such a reduction:

• the Compensation Fund (CF) paying over its annual surplus;
• pulling the surplus funds from the SETA system;
• cutting spending in the Targeted and Responsible Savings (TARS) programme; and
• extending ghostworker audits to municipalities and state-owned entities.

According to Burke, the Compensation Fund is “severely mismanaged and overfunded”, allowing for an annual surplus of R21.7 billion, which equates to three months of fuel tax relief. The SETAs, according to the DA, sit on R6.7 billion in annual surplus, making for one more month of fuel tax relief. TARS, in turn, has accumulated R12 billion in savings, allowing for two months of fuel tax relief.

Strengthening government expenditure efficiency and ending the “waste of taxpayers’ money” could effectively alleviate the burden put on South Africans by this global shock, in the DA’s view.

“South Africans should not be forced to carry the full cost of an international conflict outside of our control, especially when the government continues to waste taxpayer money, which we can control.”

The DA pleads for action to be taken before the fuel price shock hits on 1 April. “We are not flippant about the cost of our proposal; we understand the cost. But it is possible,” Burke emphasised. “The short-term funds are there.”

The DA further clarified that they are “not proposing to defund the RAF with this mechanism". The RAF should instead derive its funding from different sources other than the fuel levies, Burke said, as outlined above.

“We’re trying to put money back in the pockets of South Africans.”

Supply fears

During the media briefing, the DA also commented on the current fuel supply fears. According to DA spokesperson on mineral and petroleum resources James Lorimer, the bottleneck is not the supply of crude oil, of which South Africa only imports 20% through the Persian Gulf, but the supply of refined petroleum products.

The Portfolio Committee on Mineral and Petroleum Resources was informed by Mantashe on Tuesday that “we are okay with refined product at least until the end of April", Lorimer said.

The minister informed the committee that South Africa’s fuel supplies from the Gulf are not at risk, as the nation is not an ally of the United States and Israel. “According to the minister, we have no supply problems for at least the next five weeks; thereafter, we will see,” Lorimer said. “I am sure he will be held accountable for this assurance.”

Several countries have been offering South Africa cargo loads of fuel. “In my understanding, Nigeria’s Dangote refinery has about 160 000 barrels of uncommitted supply, which I am sure we will make a bid on.”

“Every rand increase in fuel prices is a direct tax on the poor people of South Africa," the DA’s Paul Swart emphasised at the media briefing.