Open letter to minister of finance on fuel levy, inflation


Cape Town - A Fin24 user wrote to say that over the past few years he has always been meaning to write an open letter to the minister of finance after the announcement of the annual national budget.

Although his name is known to Fin24, the Fin24 user wants to use the pseudonym "A Concerned South African".

"Perhaps (each year I) naively hope that wisdom will prevail, but no. Again (there was an) increase the fuel tax. And, this year it was increased by a whopping 52c/l so that the fuel tax now stands at R5.34/l for petrol and R5.19 for diesel or about 65% tax on petrol. Let me repeat that: 65% tax on a commodity that everyone needs, directly or indirectly," he writes.

"Now, we are all fully aware of the fact that the government is broke after years of looting and rampant corruption and needs to increase revenues. However, the problem with the fuel tax is that it taxes everyone, including the poorest of the poor and everything like the basics they need for survival. You need to do better than milking those who can least afford it."


Inflation is another issue on the Fin24 user's mind.

"Of course, (the national) budget, will cause increased inflation. The problem, however, with SA’s inflation is that it is partly the result of (the national) budget with incessant increases in the fuel tax and secondly a mindset that almost everyone thinks inflation is normal and expected," he writes.

"I digress, but this last point I only realised once I had the opportunity to live in another country, where I was surprised to see that my tenancy agreement does not include a hike after 12 months and that almost all prices and rents are determined by the market - that is supply and demand and could go up or down."

In the Fin24 user's view, in South Africa there is a mindset that prices and rents only go one way and that is up - usually 6% to 10% every year.

"Why should this concern the powers that be? Well, as you no doubt know, compound interest is a very powerful force and that force is working against us in the face of incessant increases in the fuel tax and municipal rates," he writes.

"Why does foreign companies invest in SA? Despite what you may think, it is not because of good governance, low corruption or safety and security. Stating the obvious, it is because SA offers a low-cost operating environment. But, with the compounding effect of our government or mindset-driven inflation, this will soon change and SA will no longer be attractive to foreign investment, which will result in less tax revenue for (government) and fewer jobs for the poor."

The Fin24 user implores the minister of finance to think about those millions of unemployed who are now paying more for bread and will likely have to pay even more for it after next year's budget.

"Dear finance minister, it is in your hands. Do what is good for the economy and everyone benefits," the Fin24 user concludes.

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