Fuel levy increase to hit SMME transporters hard

A fuel levy increase is on
the cards for the 2017/2018
financial year – which
transporters, especially
small and medium
contractors – can ill afford.
And while economists are
divided on the level of the
increase, Efficient Group
chief economist Dawie
Roodt predicted last week
that the Minister of Finance,
Pravin Gordhan, could
potentially announce a huge
hike in the fuel levy in his
budget speech next month.
The minister announced
in his medium-term budget
policy statement in October
last year that the National
Treasury would have to raise
R28bn more in taxes in the
upcoming financial year
if the government were to
sustain its spending plans.
Roodt forecast a R1/litre
increase in the levy which
would go a long way toward
filling the hole, with an
average of 22 billion litres of
fuel consumed annually on
average.
It is
however this
figure of a
potential
R22 billion
contribution
to the
national
coffers that
has Mike
Schussler of
economists.
co.za
estimating
a far lower
fuel levy increase.
“There are many other
ways in which tax revenue
can be inf lated, including
the imposition of the
pending sugar and carbon
tax which we expect will be
announced next month,”
he said, adding that he
expected the increase to be
between 30
to 50 cents a
litre.
“A R1 per
litre tax
would be
disastrous for
the economy
as transport
costs are
already so
high and
transporters
are operating
on such a low
profit margin,”
said Schussler, noting that
the profit margins for
the transport sector had
been less than 4% in the
2015/2016 financial year.
He predicted that the
proposed carbon tax would
be around 13 cents per litre
which would also hit the
transport sector. “About
40% of the carbon tax will
come from fuel,” he pointed
out.
Increasing pressure on
profit margins affects the
small and medium sector
transporters the hardest,
especially those who provide
contract rates which are
usually only updated once
every six months, said
Schussler.
“They will inevitably
cut corners on other
aspects – such as truck
maintenance and investment
in new vehicles – which
puts pressure on other
aspects of the economy,” he
commented.
INSERT & CAPTION
A R1 per litre tax
would be disastrous
for the economy as
transport costs are
already so high.
– Mike Schussler