The Institute of Race Relations (IRR) has warned that increasing interest rates ‘will not be enough to slow price hikes if business remains shackled by the fuel tax’.
In a statement, the IRR points out that, according to Stats SA, transport costs have increased 20% in the last year, ‘by far the largest direct contributor to increased headline inflation’. Inflation is now at 7.4%, the highest in a decade.
‘Increased transport costs affect all supply chains that involve the movement of goods or people, touching practically every aspect of the economy.
‘Fuel costs have increased by 43.5% in the last year. Roughly one third of the price at the petrol pump is paid to government bodies. This amounts to an acute tax on the movement of goods and people that disproportionately affects low-income labourers travelling to and from work.’
Said IRR Head of Campaign Gabriel Crouse: ‘The government’s fuel tax is literally slowing everything down, except inflation. Cut the tax, cut the cord, free people to move cheaply. That is the best way to cool inflation.’
* The government yesterday gazetted a notice inviting public comment on a proposed price ceiling on 93 octane petroleum.
Democratic Alliance DA Shadow Minister of Mineral Resources and Energy, Kevin Mileham MP, welcomed the announcement, but said it ‘still does not go far enough’.
Mileham said: ‘Government has maintained unnecessary control over the fuel price for too long, thereby hindering competition in the fuel sector which would result in lower prices at the pump for consumers, and more innovative selling methods by fuel retailers.
‘The DA believes that a full deregulation model which goes beyond a price ceiling is most desirable for consumers and producers alike. Full deregulation is common practice in developed economies, and it is time South Africa joined their ranks.’
He also believed all grades of petrol should be subject to a price ceiling.
Mileham said the DA would shortly table a Bill in Parliament ‘which goes beyond a price ceiling by allowing for full deregulation of the market’.
[Image: https://pixabay.com/photos/fuel-petrol-gas-gauge-empty-full-2741/]