When government announced changes to the fuel tax levy on Wednesday, motorists found themselves in an age-old “swings and roundabouts” scenario.

When government announced changes to the fuel tax levy on Wednesday, motorists found themselves in an age-old “swings and roundabouts” scenario.

CARtoday.com reported recently that President Thabo Mbeki had announced a new fuel pricing structure, ie: a revision in the way the basic petrol price is formulated. At the time, it was believed that the move would save motorists up to R1 billion a year.

However, Finance Minister Trevor Manuel on Wednesday announced changes to the fuel tax levy that would add on approximately R1 billion to the fuel price structure.

on Thursday quoted a spokesman for the SA Chamber of Business as saying: “In terms of the announcement by the president of changes in fuel price determination, it seems to be offset by the proposed increase in the fuel levy”.

Manuel eliminated the differential between the fuel levies imposed on leaded and unleaded petrol, increasing both to 101c/l to give the refining industry time to improve its ability to produce clean fuel.

The levy on leaded petrol increases by 3c/l on April 2, while that on unleaded petrol goes up by between 6,2c and 9,2c/l, depending on the octane rating. The general fuel levy on diesel increases 4c/l to 85c/l, while the Road Accident Fund levy will rise 3c/l to 21,5c/l.

There was no increase in the general fuel levy on petrol and diesel last year. Manuel pointed out that the tax burden on fuel had fallen from an average of 45 per cent of the pump price in 1998 to about 31,4 per cent in 2002-03.

In deciding on the increases, which were expected to raise about R642 million for the national revenue fund and another R474 million for the road accident fund in the 2003-04 financial year, he took into account the strength of the rand and the adoption of a more streamlined approach to fuel pricing, Manuel said.

Petrol and diesel attract five separate taxes and levies. These levies include the general fuel levy, which finances general government expenditure; the road accident fund levy, which is dedicated to claims from third parties injured in motor accidents; a customs and excise levy imposed in terms of the Southern African Customs Union pool agreement, which finances regional development and stability; an equalisation levy used to stabilise short-term price volatility; and a levy on diesel to defray the costs of dyeing paraffin to stop the illegal practice of blending it with diesel to evade tax, reported.

“The combined effect of the juggling of the regulated fuel price means the effect of the changes to the motorists could be negligible on April 2 (when the new pricing mechanisms take effect), particularly as the government was already collecting an average of 27,5 cents a litre too little on the fuel price, because of the sharp increases in world price of crude oil,” an analyst said.

Original article from Car