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FUEL LEVY

 

The main income received by the Road Accident Fund is a levy that is based on fuel sales known as the RAF Fuel Levy. The RAF Fuel Levy income is a charge levied on fuel throughout the country and the quantum of the RAF Fuel Levy per litre is determined by the National Treasury on an annual basis, whereas total fuel sales are influenced by a number of macro-economic factors. The RAF annually requests an increase in the RAF Fuel Levy from NT based on a financial funding model and a calculation of its costs during the coming year. The full extent of the RAF Fuel Levy requested is seldom granted. This is because NT has historically set the levy on a pay-as-you-go basis rather than with the purpose of establishing a fully funded position for the RAF. The RAF Fuel Levy is currently at 193 cents per litre for the 2018/19 financial year.

The South African Revenue Service (SARS) administers the collection of the Fuel Levy and pays it to the RAF in accordance with provisions of the Customs and Excise Act, 1964 (Act No. 91 of 1964) and the RAF Act.

 

The two main variables that determine the income of the RAF are the volumes of petrol and diesel sold per annum and the rate of the levy. The RAF Fuel Levy can be viewed as a compulsory contribution to social security benefits which is used only for the specific purposes as provided for in legislation. The RAF Fuel Levy collection process is depicted in the figure below.

 

 Fuel-Levy

 

Fuel Levy

The growth in the RAF Fuel Levy income during the 2017/18 financial year arose primarily as a result of 9 cents per litre fuel levy increase, from 154c/l (2016/17) to 163c/l (2017/18), effective from the beginning of the financial year. Fuel volumes in respect of petrol and diesel consumption increased slightly by only 1.7% to 21.9 mega litres for the period April 2017 to March 2018 (2016/17: 21.6 mega litres (Graph below).

 

Growth in Fuel Levy income

Source: Statistics on "Fuel Sales Volume SA: Petrol and Diesel" - Department of Energy (DoE);

 

At 31 March 2018, the RAF Fuel Levy represents almost 12% of the total fuel price at the pump, which averaged more than 1,378 cents per litre in Gauteng in the 2017/18 financial year (Graphs below).

 

 Historical analysis of the RAF Fuel Levy versus fuel price and basic fuel levy

 

Breakdown of petrol price (Gauteng) 31 July 2018