• The Price of paraffin – The hand that giveth also taketh away
Articles:

The Price of paraffin – The hand that giveth also taketh away

08 April 2019

Ayanda Masina |
Seelan Muthayan , National Head of VAT |

Following the fuel price hikes in March, South Africans should brace themselves for another fuel hike in April. The increase will be exacerbated as it comes into effect with the increase in the fuel levy, effective from 1 April 2019. The fuel levy on petrol and diesel will increase by 29 cents and 30 cents per litre, respectively. The full fuel price increase is projected to be R1.18 for petrol, 90 cents for diesel, and 63 cents for illuminating paraffin.

Illuminating paraffin is currently not subject to levies. In the 2019 Budget Review documents, National Treasury indicated a potential imposition of a fuel levy on fossil fuels such as illuminating paraffin. A fuel levy on illuminating paraffin would affect the poor the most, as this is the preferred source of fuel in their households.

The apparent reason for National Treasury to consider imposing fuel levy on illuminating paraffin are that certain fossil fuels such as biofuels and aviation fuel used in transportation are not subject to the RAF levy. However, damages arising from accidents involving motor vehicles operating on fossil fuel sources can be claimed from the RAF.

An interesting fact to consider, is that no motor vehicles in South Africa use illuminating paraffin as a fuel source, therefore we must question what the true reason is for National Treasury imposing the RAF levy on illuminating paraffin. With a weak rand, a general increase in the cost of living, and continued load shedding, a fuel levy on illuminating paraffin will increase the financial burden on the poor.

Read more BDO Insights