10 July 2014

South Africa: Have S. Africans Paid Up R238 Billion in Fuel Levies in 6 Years? Not If You Do the Sums

Photo: Herby Hönigsperger/Flickr
South African petrol station (file photo).

The Opposition to Urban Tolling Alliance (OUTA) and the Democratic Alliance (DA) have made various claims about fuel levy figures for recent years. But they are out by huge margins.

How much have South Africans coughed up in fuel levies in recent years? Was it around R238-billion over the past six years or R240-billion since 1998, or R180-billion?

These are the conflicting claims made recently by the Opposition to Urban Tolling Alliance (OUTA) - a pressure group campaigning against controversial electronic tolls implemented in Gauteng province - and the Democratic Alliance (DA).

Both argue that road construction and maintenance could be adequately funded using the existing national fuel levy system and that there is no need for e-Tolls.

A recent post on OUTA's Facebook and Twitter accounts asked: "Two hundred and thirty eight billion in six years. Where has it all gone? Remind me again why we have e-Tolls?" And it exhorted readers to "[s]hare this if you agree we need a forensic audit of the fuel levy fund".

The DA took up the charge on Monday with a press release jointly issued by its parliamentary leader, Mmusi Maimane, and MP and transport spokesman Manny de Freitas.

"Currently the National Roads Act of 1971 allows the government to collect a fuel levy from every litre of fuel sold, and to add that to the national fiscus and spend it on any budget item," they stated. "Over R240-billion has been collected through this levy since 1998."

(Interestingly, a version of the press release dished out to journalists at a DA press conference stated that "[o]ver R180-billion has been collected through this levy since 1998".)

Maimane and De Freitas went on to argue that "the fuel levy ought to be directed solely to road construction and maintenance, which will further negate the need for e-Tolls".

Needless to say, we were left a little confused by the various figures cited. And so were some of our readers who asked us to crunch the numbers.

What is the fuel levy?

So what is the fuel levy and what is it currently used for? Put simply, it is an annually adjusted tax that is largely intended to fund government's general expenditure programmes. About a third of the money is also shared with metropolitan municipalities.

For the 2014/15 financial year, the levy amounts to 224.5 cents per litre of petrol sold and 209.5 cents per litre of diesel.

So where did OUTA and the DA get their numbers?

We contacted De Freitas who claimed that the R240-billion figure originated from studies done by the Automobile Association (AA) and the Southern African Bitumen Association (SABITA). But neither the AA study, which was conducted in 2008, nor the 2006 one carried out by SABITA list fuel levy amounts.

OUTA chairman Wayne Duvenage said the fuel levy figure their association used had been calculated by multiplying the total litres of fuel sold in a given year - gleaned from annual reports of the South African Petroleum Industry Association (SAPIA) - with the fuel levy tax rate. But this method is wrong as SAPIA provide totals for a calendar year, whereas the fuel levy changes at the beginning of government's financial year each April.

"We had not updated our research until Friday and I guess this amount may have been based on conservative assumptions or different time periods," Duvenage said, conceding that OUTA should "do more thorough research before we repost information of this nature".

The numbers unpacked

So how much was really collected tom the fuel levy? The answer lies in tax statistics compiled by the South African Revenue Service and the national budget.

The National Treasury's 2013 Budget Review lists fuel levies collected from 1995/96 to 2011/12.

Taken from the 1998/99 financial year to 2012/13 the total amount collected comes to just under R340-billion, far more than the DA's claimed R180-billion and R240-billion.

When calculated for the last six financial years - from 2007/08 to 2012/13 - fuel levies amount to R188.8-billion. That is around R50-billion less than the amount cited by OUTA in its Facebook and Twitter postings.

Conclusion: Claimed fuel levy figures are incorrect

The numbers bandied about by OUTA and the DA were out by huge margins.

Accurate data is vital to informed public debate around e-Tolls, their effectiveness and possible alternatives.

It is encouraging that OUTA have admitted their error and intend researching future claims that they make far more thoroughly.

Edited by Julian Rademeyer

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