Gavin Kelly | CEO | Road Freight Association | mail me |
We note the decision by the Minister of Finance to increase the fuel levy by 4% – 16 cents per litre for petrol and 15 cents for diesel. This increase will directly affect consumers.
Transporters cannot absorb these additional costs without harming their bottom line and threatening business sustainability. As a result, transport costs will rise, and these increases will inevitably be passed on to end users.
Taxing citizens rather than cutting wasteful expenditure
In essence, Treasury is “finding” R4 billion to cover the R75 billion shortfall from the previous budget cycle. However, this fuel levy hike decision highlights a troubling trend. Treasury would rather tax citizens than cut the wasteful expenditure that has led the country into its current economic position.
Consequently, transport will become more expensive. Consumers will bear the burden of higher costs, and the long-standing belief that government can continue raising taxes and levies to sustain uncontrolled spending remains unchanged.
Government does not generate its own money, it belongs to taxpayers. The time for accountability and fiscal responsibility has clearly arrived. Yet instead of tightening its belt, government continues to look to the public to fund its inefficiencies.
The fuel levy hike will pressure on transporters
From June, logistics will become more costly, especially considering that 85% of goods in South Africa move by road freight. This added pressure on transporters will cascade through the entire economy.
As logistics costs increase, global supply chains may begin to re-evaluate the competitiveness of routing through South Africa. Domestic consumers will also feel the pressure.
Every trip to work, every item purchased, and every service used will cost more. You and I will dig deeper into our pockets, not for improved services, but to fund government salaries, wage increases and a long list of vanity programmes. This is a short-sighted and harmful decision. It lacks both medium- and long-term strategic thinking.
The consequences will not be temporary. Businesses may reduce operations or pass costs down the chain, affecting jobs and economic growth. Consumer confidence may drop further, deepening the financial strain on already overburdened households. South Africa risks eroding its logistical competitiveness, further isolating itself in global trade networks. This is not a good decision – neither now, nor for the future.
