Barbara Creecy: Rejects RAF Fuel Levy Increase Amidst Economic Strain

• Transport Minister Barbara Creecy has rejected a proposed 33% increase to the Road Accident Fund fuel levy.
• The Road Accident Fund had sought to raise its levy from R2.25 to R3 per litre.
• Cosatu welcomed Creecy's decision, citing existing high fuel prices and economic strain on motorists and workers.
• Cosatu is advocating for Parliament to pass the Second Special Appropriation Bill to provide R10 billion in fuel price relief.
• The next South Africa fuel price outlook for November suggests varied changes for petrol and diesel, with the adjustment expected on November 4.

Transport Minister Barbara Creecy has firmly stated her opposition to any increase in the Road Accident Fund (RAF) fuel levy, citing the significant financial strain already faced by South African motorists.

Transport Minister Barbara Creecy has firmly stated her opposition to any increase in the Road Accident Fund (RAF) fuel levy, citing the significant financial strain already faced by South African motorists. In an interview reported on October 12, Minister Creecy declared her intention not to request a higher levy from the National Treasury for the duration of her tenure. This announcement comes after the RAF had proposed a substantial increase, seeking to raise its portion of the pump price from R2.25 to R3 per litre, which would represent a 33% hike or an additional 75 cents per litre.

The Minister emphasized that her priority is to address the fundamental issues within the RAF's management and financial structures, rather than imposing further burdens on consumers. She explicitly ruled out the possibility of securing additional government funding to support the beleaguered fund. This stance was met with approval from the Congress of South African Trade Unions (Cosatu), which, in a statement issued on October 15, welcomed Creecy's decision, characterizing the proposed levy increase as a potentially "devastating blow" to millions of workers and commuters across the nation.

Cosatu's reaction highlighted the broader economic pressures, noting that over the past year, petrol prices have surged by more than 25%, while diesel costs have escalated by over 50%. The federation attributed these increases, in part, to the conflict in the Persian Gulf, linking them to a slowdown in economic growth, an inflation rate that has reached 4.4% and is projected to hit 5% next month, and two recent repo rate hikes. In light of these challenges, Cosatu has called for urgent action to combat corruption, wasteful expenditure, and financial mismanagement within the RAF, also commending the recent appointment of a new chief executive.

Crucially, Cosatu has urged Parliament to prioritize the retabling of the RAF Bill. The federation believes this legislative measure is essential to rectify the fund's inherent structural flaws, ensuring that its limited financial resources are directed primarily towards providing relief for working-class claimants, rather than benefiting affluent individuals who possess private insurance. Furthermore, Cosatu is advocating for the swift passage of the Second Special Appropriation Bill by the end of October. This Bill is designed to allocate R10 billion to the Equalisation Fund, managed by the Central Energy Fund, with the specific aim of cushioning fuel prices, and Cosatu insists these funds should be utilized for direct fuel levy relief.

The parliamentary Standing Committee on Appropriations adopted its report on the Second Special Appropriation Bill on October 8, though the National Assembly has yet to debate it. This legislative process is unfolding amidst a broader government effort to alleviate the financial strain of fuel costs, with President Cyril Ramaphosa indicating in early October that various options are under consideration, albeit with a cautious approach to public spending. Minister Creecy's commitment specifically pertains to her department's requests, as the National Treasury retains authority over other taxes and levies that contribute to the overall fuel price.

The ongoing debate holds significant implications for the South African economy and its citizens, particularly with the next fuel price adjustment anticipated for November 4, typically the first Wednesday of the month. While early data from the Central Energy Fund suggests a potentially smaller increase for petrol compared to October, there are indications of possibly larger increases for diesel and paraffin. The outcome of the legislative efforts, particularly regarding the Second Special Appropriation Bill and the RAF Bill, will be critical in shaping the future financial landscape for motorists and the operational stability of the Road Accident Fund.

Lawyers and compliance officers should note the Transport Minister's firm stance against increasing the RAF fuel levy, which prevents an immediate cost increase. However, they should closely monitor the proposed retabling of the RAF Bill in Parliament and the progress of the Second Special Appropriation Bill, as these legislative developments could significantly alter the RAF's funding structure and potentially impact fuel costs or claimant compensation in the near future.

Source: Original reporting based on news sources.