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Ahead of tomorrow’s Medium Term Budget Policy Statement (MTBPS), ActionSA has placed immediate relief for South Africans grappling with rising fuel prices and the cost of living, alongside decisive action to tackle the illicit economy, at the centre of its expectations for the Minister of Finance.

We have already called on the Minister to reduce the fuel levy to provide urgent relief to South Africans and businesses that simply cannot afford the sharp increases in fuel prices. Government must surely act in recognition that fuel prices translate into higher prices for food, basic goods, services and virtually every part of the economy that depends on transportation.

With SARS continuing to record strong revenue collections above targets, in a large part due to being further capacitated, the government has a compelling opportunity to provide meaningful fuel levy relief without compromising its fiscal objectives. 

The reality that government has yet to take seriously is that the illicit economy, estimated to account for 15% of GDP, undercuts legitimate businesses across multiple industries, from fuel and clothing to tobacco and electronics. It destroys jobs, deprives the fiscus of revenue and exposes consumers to potentially dangerous products. Every rand diverted into the illicit economy weakens South Africa’s ability to grow.

Repeated above-inflation increases in excise duties on tobacco and alcohol have placed legitimate businesses under growing pressure while creating further opportunities for the illicit trade to expand. The Minister must announce a three-year moratorium on above-inflation increases in excise duties on these products to provide legitimate businesses with greater certainty, protect jobs and help curb the growth of the dangerous illicit market.

At the same time, cracking down on the illicit economy would broaden the tax base by bringing economic activity into the formal sector and recovering revenue currently lost to the fiscus. By combining fuel levy relief with decisive action against illicit trade, government can ease the cost-of-living crisis, strengthen revenue collection and support economic growth.

ActionSA’s support for the adjustment budget will depend entirely on whether the GNU is prepared to deliver urgent relief to struggling South Africans and take action against the illicit economy. We cannot support a budget that asks South Africans to bear more of the burden while government fails to address the underlying problems holding our economy back.

Issued by ActionSA Member of Parliament  Alan Beesley