Consumer Price Index (CPI) figures: State must reduce fuel tax

18 August 2021

Solidarity spoke out today against the high tax rate that is levied on fuel. This follows the Consumer Price Index (CPI) figures released today, which indicated that fuel and food are the items where figures show the highest rise.

Food and fuel are both higher than the headline CPI rate of 4,6%, especially with fuel becoming alarmingly more expensive with a rate of 15,2%, completely strangling consumers.

According to Solidarity, the high fuel price is one of very few figures that can be directly influenced by the state. Not only the fuel price is directly affected by reducing the fuel levy in particular, but also other prices such as food prices, because it will be significantly cheaper to supply said products to consumers.

“People must travel, and people must eat. To incur these costs is unavoidable. Almost all products and services are also dependent on transportation. The effect of the fuel price thus has a larger impact and is thus more important than the direct impact thereof on the consumer. The increase of this leads to the economy shrinking and consumers becoming poorer in reality. However, the government can do something about this,” said Theuns du Buisson, economic researcher at the Solidarity Research Institute (SRI).

According to Du Buisson, the total tax of R6,26 on fuel, is much too high and it can be adjusted downwards to provide immediate relief and promote economic growth. He argues that it can be directly controlled by the government and since it is one of the smaller contributions to the budget, it can definitely be reduced, especially considering there are countries that subsidise fuel consumption to stimulate economic activity.

“The total tax on a litre of petrol was R2,61 in 2011. The rate we are currently paying is completely insane. The government’s mentality that growth will take place through heavy taxes must be rejected. Instead of providing people and businesses with space to grow economically and creating jobs, they are suffocating the ability of households and the ability of suppliers and employers. The government must intervene where it is in power and take the necessary steps to alleviate the country’s burden,” Du Buisson concluded.

Issued by Johnell van Vollenhoven, Spokesperson, Solidarity, 18 August 2021