Budget reflects need to curb oil thirst

One of the clearer but somehow least noticed messages from this year’s budget, introduced this week in Parliament by Finance Minister Pravin Gordhan, is that fiscal measures increasingly will be used to dampen South Africans' thirst for oil-based fuel – and in the process, change their commuting patterns.

The cost of private commuting will go up considerably as from 7 April, with an increase of 25.5 cent per litre. The additional income will be split in part between funding of a new pipeline between Durban and Gauteng, and the Road Accident Fund.

The increase brings the combined fuel taxes on petrol and diesel to almost a third of its price at the pump. This move, economically, to force people out of their cars goes hand in hand with massive spending over the last number of years – and still ongoing – in upgrading the public transport infrastructure.

The drive toward alternative commuting patterns was enhanced further by the declaration that the previously announced ad valorem carbon emissions tax on new passenger cars now will come into effect on 1 September this year as a specific tax and not an ad valorem.

New passenger vehicles will be taxed based on their certified carbon dioxide emissions at R75 per g/km for each g/km above 120 g/km. This tax could add between R5 000 and R10 000 to the purchase price of the average new passenger vehicle.

The Treasury plans eventually to extend the emissions tax to commercial vehicles, once agreed standards for carbon dioxide emissions for these vehicles have been set. The Treasury further noted that it would continue to research potential options to expand environmental levies and taxes further.