Cape Town – Members of Parliament have criticised the National Treasury’s decision to increase the fuel levy, warning that it will have a harsher impact on the poor than a value-added tax (VAT) hike.
Finance Minister Enoch Godongwana announced a fuel levy increase of 16 cents per litre for petrol and 15 cents for diesel during his budget speech.
According to SABC News, Deputy Director General on Tax and Financial Policy in the National Treasury, Chris Axelson said this is the first fuel levy adjustment since April 2021 and aligns with an expected inflation rate of around 4%.
MPs, including the ANC’s Soviet Lekganyane, raised concerns during a joint parliamentary meeting, questioning the lack of measures to protect vulnerable groups.
He argued the levy is a regressive tax that will burden all workers and is more damaging than the previously proposed 0.5% VAT increase.
“The increase in the fuel levy, which is going to have impact or influence in the rising costs, what are the plans that are there to protect the poor and the vulnerable?,” EWN quoted Lekganyane as saying.
EFF MP Omphile Maotwe argued that the fuel levy hike would not raise substantial revenue, generating only R4 billion.
“We reject the fuel levy. When we rejected VAT in March, we never said it must be replaced with the fuel levy. They just went to convert VAT to a fuel levy. What is more painful is that the increase is only going to generate R4 billion – you are saying that yourself,” Maotwe said.
The National Treasury has, however, defended its decision to increase the fuel levy.
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