More tax: VAT on fuel

The declining economy has seen an increase in costs of pretty much everything and consumers are finding it hard to come by.

There is, unfortunately, more bad news for consumers around the corner. Whilst at least not another reshuffle, the former Minister of Finance proposed in the 2017 National Budget to add VAT to the rising cost of fuel, in addition to the rising fuel levy, which, from 5 April 2017 is 30 cents per liter.  The proposal is intended to take effect in 2018/2019 fiscal year.

Currently the price of fuel, as paid for by you and me, does not carry VAT (or more technically stated, it is zero rated). If this proposal finds its way into legislation, we will be forking out even more for fuel. While it is true that this proposal will have to fight its way through the public consultation process before finding resting place in law, our money is on the proposal.

In his medium-term budget policy statement delivered late last year, the former Finance Minister made it abundantly clear that additional taxes need to be collected. As an increase in the VAT rate is, in our view, off the table for now (now even more so than ever before), expanding the VAT base is inevitable. What would not surprise us (now even more so than ever before), is if certain exceptions are made to this additional cost in the public transport industry.

As for the rest of us, we are likely to end up having to pay.

Author: N Theron