Fuel, taxi hikes to hit hard

2013-07-10 00:00

THE threat by government to raise taxes, coupled with a predicted 61c per litre increase in the petrol price next month, is expected to have a ­devastating effect on consumers.

Many South Africans are struggling to make ends meet due to rising fuel, transport and electricity costs, high levels of indebtedness and rampant unemployment.

The South African Savings Institute (Sasi) said household debt is a high 75,4% of average annual income.

“Things are not going how we anticipated. There is a negative ­impact on revenue collection,” ­Deputy Finance Minister Nhlanhla Nene told a Sasi function on Thursday.

Finance Minister Pravin Gordhan hinted at tax hikes when he ­presented the budget in February. Nene said such a step could not be ruled out in these “tough” times.

“There are so many people on the knife-edge that the fuel price ­increase is going to have devastating consequences. We can only guess what the tax increase is going to be, but it will unquestionably hit middle class consumers hard,” he said.

National Treasury communications director Phumza Macanda said it had been announced in the last budget that a committee would be appointed this year to review tax ­policy, and any changes would be ­announced in the next budget.

The review would assess whether the present tax policy was ­appropriate to support the ­government’s ­objectives of growth, employment, development and ­fiscal sustainability, said Macanda.

The National Development Plan envisaged: “What we contribute in our taxes, we get back through the high quality of our services”, he said.

Neil Roets, CEO of debt counselling firm Debt Rescue, said in a ­statement that the number of ­consumers seeking help from his company had more than doubled over the past six months.

Roets said the situation had ­become dire.

“It’s a well-known fact almost half of all credit-active consumers have impaired credit records,” he said.

In other words, about nine million consumers are in arrears (by three or more months) on at least one account, or have a debt judgment or administration order to their names.”

“While the increase in the price of fuel is going to hit everybody, the tax increase is going to hit the emerging middle class especially hard.

“Many have clawed their way out of poverty by working hard and counting their pennies. To now be faced with the threat of higher taxes as well as an all-time high fuel price is going to push large numbers of them back ­into poverty,” said Roets.

“Instead of curbing its own ­spending and curbing spiralling ­corruption and waste in the public sector, the state is squeezing the ­consumer ever harder to make up the shortfall in the budget,” he said.

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