FIFI PETERS: I’m positive you all know by now that come midnight we will probably be paying a new file [price] for petrol when the brand new costs kick in. Most of additionally, you will know by now that the DA, the Democratic Alliance, believes that deregulating the fuel market right here in South Africa, the place the petrol value is actually left to the free market to set with none interference from authorities – as is presently the case – will in the end end in decrease costs on the pumps.
But for extra evaluation on this proposal by the DA, I’m joined by Stephanie Fick, the chief director for the Accountability Division at Outa (Organisation Undoing Tax Abuse). Stefanie, thanks a lot to your time. What do you make of what the DA is saying, and whether or not elevated competitors will certainly result in decrease costs on the pump?
STEFANIE FICK: Good night. Yes, I feel it’s an fascinating idea and perhaps it deserves a little little bit of dialog. But I’m a bit sceptical within the sense that, in the event you go and have a look at how the petrol value consists, I have no idea whether or not that may assist, essentially. I feel the most important downside that we face with the petrol value is firstly the levies which have gone up over a time period: the essential fuel value round 9% in the event you take a median, [and] the RAF [Road Accident Fund] levy 12%, 13% over a interval. Whether we will do away with these levies is debatable. I don’t suppose so, as a result of how are we going to fund it?
To come to my unique level, the massive greatest downside we’re sitting with is the sum of money we pay per barrel for oil, which clearly we’ve seen. But I feel even worse than that’s our rand/greenback trade price. Just to present you an instance, in July 2008 we really paid extra for oil per barrel. It was at $120/barrel. Now it is round $113/barrel, however we pay extra for petrol. One of the explanations is the rand trade price. At that time, it was R7.82/greenback. It is now at R16.35/greenback. So the larger downside we’ve got is that we have to work on the trade price. How we do that’s to unravel South Africa’s financial coverage in order that we will get stimulation there and produce that down.
FIFI PETERS: I additionally don’t know a lot about this. I’m looking for out as a lot as I can, however I feel that when it comes to what you’re referring to, the truth that we import oil on the worldwide value and at what our rand dictates, what we pay simply speaks to one of many shortfalls of this proposal, provided that maybe it may work if South Africa had refining or extra refining capabilities whereby we [would be] in a position to refine our personal oil, make it match for function for the automobiles. But that isn’t presently the case, which is why we import as a lot as we do proper now.
STEFANIE FICK: That’s right. We are, in different phrases, on the mercy of no matter occurs internationally. Now we don’t have management over it, though what we do have management over is to try to minimise the danger we’ve got with the rand/greenback trade price – if we will get that decrease. That implies that [if] internationally they wish to spend money on South Africa, I feel that may make a distinction when it comes to our unemployment price.
So to return again to the proposal, to provide you with strategies is at all times a good factor.
I simply suppose that it’s a bit opportunistic now as a result of taking away a authorities’s means to dictate no matter occurs with the fuel value will not be going to unravel the issue we’re at present sitting with.
FIFI PETERS: Someone additionally informed of an instance in California up till yesterday; I see the costs have come down fairly a bit, however in California they pay round $5 a litre for gasoline. I feel that’s what they name it that aspect of city. And in the event you do the conversion with the trade price proper now, you’re taking a look at R82 or so per litre – and that’s a market through which the market is free and there’s little authorities interference, simply talking to your level that the free market might not essentially be the answer right here. In your view what could possibly be the answer to decrease costs, issues that we really do have inside our management as a result of the forex is usually past us? We may be doing all the precise issues from an financial standpoint, but when the greenback decides to do what it’s doing, like right this moment when it comes to strengthening, that’s past our management. So what components can we modify inside our management, in your view, to decrease the value of petrol proper now?
STEFANIE FICK: I feel it is a good concept to go and have a look at the completely different levies, all of the levies – as a result of we’re speaking about 11 completely different levies, and it is a simple method for presidency to get tax. You can’t separate, for instance, the fuel value from all of the levies. So it’s a simple method of accumulating tax, no matter the reason being. It’s to go and have a look at the completely different levies to see if all the pieces remains to be match for function, after which have a look at the best way that there have been will increase over a interval – your retail and wholesale will increase and all of that. Go and have a look at these margins and see whether or not there aren’t some levies we will put off.
And then the fuel levy – the fuel levy was lowered by R1.50. Obviously we are actually feeling the 75 cents kicking in. The query is a technique of, I feel, curbing the petrol [price] getting out of hand is that authorities goes some other place to search for taxes. We hear in regards to the deficit within the price range, however perhaps authorities ought to go and have a look at [its] bills.
Maybe it’s time to go and reduce some other place, as an alternative of relying closely on, for instance, the essential fuel value to guarantee that our fiscus has sufficient cash.
I actually suppose that there are fairly a few methods, a variety of ways in which authorities can cut back its bills and provides that reduction to motorists as a result of with costs going up all people’s going to really feel it. Really it is throughout the board, and persons are going to really feel it. It has an affect on all people’s each day lives as a result of, if the petrol value goes up, all the pieces goes up.
FIFI PETERS: All proper, we’ll go away it there. I feel what we wish to do is converse to fairly a variety of individuals on this. I feel the DA has additionally put it out for public remark. But my takeaway from you is simply to have a look at the opposite levies, what we will put off, and in addition have a look at different elements of the budgets that authorities can doubtlessly claw cash from to convey reduction – versus increased taxes on the fuel entrance.
Stefanie, thanks a lot to your insights. We’ll go away it there. Stephanie Fick is the chief director of the Accountability Division at Outa.