South Africans will have to brace themselves for a series of steep fuel price increases in the next few months as the cost of crude oil will continue to rise while the economy struggles.
Commuters who rely on the taxi industry, and are already struggling in a tough economic environment, will be hard-hit unless government steps in. Just this month, we have seen record fuel price increases of 99c for petrol and R1.24 for diesel that pushed fuel prices close to – and over – R17 per litre in some cases.
There is no indication that next month will be any better, as the Central Energy Fund data shows there is already an under recovery of 37c per litre of petrol and 59c per litre for diesel. To add insult to injury, it is speculated that the crude oil price may soon reach $100 per barrel.
These steep price increases are starting to push access to transport for our most vulnerable communities out of reach. South Africa has historically developed by pushing our poorer communities to the peripheries of the cities, while only those who can afford it live closer to the business centres, and their workplaces.
Petrol price increases rob poorer communities of one of their most urgent human rights – earning a living for themselves. However, while the poor state of the Rand and the high crude oil prices definitely play a role in high petrol prices, our current steep fuel price is mainly caused by government fuel taxes and levies for the Road Accident Fund.
City Press reported that over the past decade, fuel taxes have climbed 178% to R3.37 per litre of petrol and 206% to R3.22 per litre of diesel. The levy that bankrolls the Road Accident Fund – which is currently facing financial demise – has climbed 365% to R1.93 per litre of both fuels, which means that the petrol price is comprised of only 49% of the cost of the actual fuel, compared with 60% a decade ago. This newspaper article says that in 2014, National Treasury netted about R43-billion from the fuel tax. Last year, it was R71-billion.
For the average taxi driver, the latest price increase results in a R1,000 increase in fuel costs per month, and a R3,000 increase since January this year. More importantly, these costs are passed on to the commuter, who ultimately has to foot this bill.
The 2018 fuel price increases alone have resulted in an extra R1-billion input from taxi drivers, which has been passed onto the consumers. The average taxi commuter now has to fork out an additional R250 per month, just to get to and from work.
If a commuter earns R6,000 a month – and in reality, many earn far less – this accounts for up to 4% of her monthly salary. And, with many companies sticking to inflation-based increases of 6%, she will technically take home only 2% of her increase, after the direct influence of the fuel price on her pocket.
Whether we love it, or hate it, the taxi industry is the result of South African ingenuity to solve a problem created by the apartheid government’s redistribution of people to outlying areas. In the absence of a reliable public transport system, taxis have become the backbone of commuter transport, and are a major driver of the economy.
Up to 70% of our people get to and from work in taxis on a daily basis, and the industry contributes over R40-billion to the economy directly. But numerous fuel price increases, and a lack of government subsidies for the industry, taxi owners – and therefore the more vulnerable commuters – are being bled dry. Instead of empowering the most vulnerable communities in our society, we are marginalising them even further with excessive fuel taxes and levies.
As argued in the national assembly last year, it is unfair that the government subsidises other modes of transport such as the Gautrain, Metrorail and the bus industry, while excluding the taxi sector.
One of the best ways to build a strong, sustainable and reliable commuter transport industry is to build on what already works, and that is indisputedly the taxi industry. To do this, however, the industry needs the support from government that it deserves.
Renewing the ageing taxi fleet– with more fuel efficient vehicles – is one way we can lower the costs of owning and operating a minibus taxi, and therefore pass the benefits on to the commuter.
Some of the taxis on our roads are over 12 years old, and have over a million kilometres on the clock. This is not only unsafe for commuters that they transport and other road users , but also inefficient. Many vehicle owners do not have the necessary capital or finance to invest in a new vehicle, which is where government subsidies and lower fuel taxes would make the world of a difference.
If government is serious about reducing inequality and raising the socio-economic circumstances of the poorest of the poor, it needs to address the lack of subsidies for the taxi industry as well as the heavy taxes and levies raised on transport costs. DM
Vincent Raseroka is chairman of Bridge Taxi Finance