EFF contests minister’s fuel levy authority: Bobby Ramagwede weighs in

Hinzugefügt: 2026-05-20

[00:00:00]Well, let's take this further, then.

[00:00:01]We're joined in studio by Bobby Ramagwede from the Automobile Association of South Africa, in fact, the CEO of the AA. Good to have you with us in studio this afternoon, Bobby. So, your thoughts then on this case that's playing out in the high court in the Western Cape over the authority of the finance minister to make determinations around the fuel levy.

[00:00:20]Our position really is we're not too concerned about where the authority lies, but rather whether or not the structure allows for fast decision-making and prudent decision-making for the country. We've long been calling for this fuel structure to be revised and to be tabled for the country to really see what's going on. This two-and-fro about who who pushes the pin is quite secondary in this regard. But, ultimately, we we're sitting here with a situation where National Treasury is arguing that, in fact, if this power was given strictly to Parliament, it would just take too long to go through that process. Do you think, while we wait for any restructuring of how the fuel price is determined, that it should remain within the authority of the finance minister?

[00:01:03]We see no harm with it remaining within within the structures of the finance ministry. However, for better transparency and more consideration, if it were to be put in the hands of Parliament, to the extent that they can put a structure in place that doesn't impede the progress and the pace at which decisions are made, we'd welcome it. And the restructuring, I suppose, of the fuel price is a is a much bigger conversation, right? What do we put in?

[00:01:28]What do we take out in determining how much South Africans pay at the pump?

[00:01:33]Even Minister Gwede Mantashe at some point had promised that there would be action in trying to figure that out. Where are we actually at the moment?

[00:01:41]>> we have an elephant in the room in that regard. I often say to motorists and consumers that the reality is that more than 50% of your fuel price has nothing to do with the actual commodity that you're buying.

[00:01:53]So, there's an opportunity for us to revise not only the basic fuel price, which is a hot point of contention, but also the taxes associated with it. The AA has long been standing for the abolition of the taxes and for fuel to become an economic and mobility enabler as opposed to a punishment for mobility.

[00:02:14]What what do you mean by a a punishment for mobility? Because ultimately, the argument from the government is that it it is a means to raise taxation as was, for example, argued when the minister announced that there would be um a pause in a portion of the fuel levy for the past 2 months due to the war in Iran.

[00:02:33]There are many ways of raising taxes and collecting taxes. So, our position has always been that what you do by reducing the taxes is that you increase the amount of general consumption. We've got VAT, for instance. And the more you spend on general consumption and less on fuel, the more VAT the state would collect. We call that the velocity of money as opposed to the absolute value of money. But the the difficulty with that is that ultimately, you and I would still pay. Yes, we're not paying through the fuel levy, but if it goes to VAT, we would still pay. But the difficulty with that is that ultimately, you and I would still pay. Yes, we're not paying through the fuel levy, but if it goes to VAT, we would still pay. We would still pay, but we'd elect to pay. Today, you pay for fuel because you have to buy fuel in order to get to work. You don't consume because you have to consume. However, if you had more money to spend, you would likely spend more and feel less of that burden of taxation. But just on that, so you say, for example, you buy fuel cuz you have to buy it as opposed um people who see it differently could argue that you don't have to own a car.

[00:03:31]You could use another mode of transport, perhaps. Similarly, uh you say you elect to pay via VAT, but there's so much that we buy that is taxed in terms of value-added tax that we can't afford to not buy. True. And then let's add to that the fact that fuel forms a pretty big component of your general consumption. So, when we say you elect to consume versus you don't elect to to to use fuel, the reality of it is you need transportation. And whether you're transporting yourself in your own vehicle or being transported in another vehicle, that vehicle is being propelled by fuel.

[00:04:07]But we would pay nonetheless. You would pay nonetheless for that. However, to the extent that you don't have to consume copious amount on petrol, you would likely use that on general consumption.

[00:04:20]As someone then who who's got an insight on where the industry's thinking is at the moment, do you get the sense that there there's actually genuine commitment to re-looking the fuel price issue? I think there's a lot more transparency now. Consumers are reaching out to us asking, "Why do we have to pay so much for this? And where is the transparency line by line of all of the inputs that make up the fuel price?" The next step is for us to actually have that engagement with the government where they will bare all to us and show us exactly what it is that goes into the fuel price. But what about the the external factors, Bobby, that have bearing on how much we do pay at the pumps? I mean, I just referenced, for example, um the war that the United States and Israel started with Iran at the end of February. Iran retaliating with the closure of the Strait of Hormuz where a fifth [clears throat] of global oil production goes through in terms of transit, right?

[00:05:13]How much can we control domestically? We can control quite a bit of it. So, South Africa is less affected than most other countries when it comes to the supply of oil. This takes me back to the point about the basic fuel price. Today, that that is an opaque number. It's just a number that's provided to you as is.

[00:05:30]But behind it, there are constructs. A portion of it is crude, a portion of it is distribution and taxes. Once we have clear sight of all of those components, you'll quickly realize how much of your fuel price is the actual commodity. How much cheaper in reality would a calculation of the fuel price on the model that you are proposing actually make it.

[00:05:51]Would it be for example this three round cut that we've been talking about in the last two months?

[00:05:56]>> Three round cut was very welcome reprieve, but in reality you're paying more than five round above what you should be paying for fuel.

[00:06:03]So how much would it come realistically on the model that you are proposing? How much would that shave off what we do pay? On petrol you'd be shaving off five round and on diesel you'd be shaving off up to 10 round.

[00:06:15]And do you foresee in the coming month in June when would you fall another adjustment in the fuel price? Do you think it's going to go up again because the war does not seem to be ending? The war is unrelenting. The reality of it is we are basing our fuel price changes on the crude price as opposed to the fundamentals of our fuel price. You'll probably see another increase. The question is how much of it is going to be passed and how much of the tax is the finance minister going to give back onto the table to prevent what we call an inflationary shock. Bobby, really good to talk to you Bobby Magwede, CEO of the Automobile Association. Thank you so much for coming into studio this afternoon.

[00:06:54]>> Thank you.