If you own a car, you’ll now have to fork out more when filling up its petrol tank thanks to increases in both the fuel and Road Accident Fund (RAF) levies.
According to today’s Budget Speech, the general fuel levy will rise by 22 cents per litre, while the RAF levy increases by 30 cents per litre. These increases will be implemented from 4 April 2018, resulting in a combined 52 cents in additional money that consumers will pay for each litre of fuel.
You’re also likely to be impacted by a higher value-added tax (VAT) rate (which Finance Minister Gigaba raised to 15% from 14%) on new vehicle purchases including tyres, parts and other accessories. Aspirant owners of luxury cars will also be hit by a higher ad valorem tax (tax that is based on the assessed value of an item).
According to Craig Polkinghorne, Head of Business and Commercial Banking at Standard Bank, the increased RAF and fuel levies, along with the rise in VAT, will have some inflationary impact. However, if the budget is judged by the market to be business and investor friendly, the rand is likely to react positively, which will, in turn, ease inflationary pressures by reducing the cost of imported fuel and other goods.
The Finance Minister’s 2018 Budget Speech came shortly after a report by Statistics South Africa that showed that inflation eased to 4.4% in January, down from 4.7% in December. That was the tenth consecutive month that inflation has remained within the Reserve Bank’s target band of 3% to 6%.