Government has money set aside for fuel price relief, so what's the hold-up?

We're paying more and more to fill up our tanks, and with oil prices remaining high, another petrol price increase could be on the cards. But can government actually do anything to help? Bureau for Economic Research economist Tracey-Lee Solomon explained that government has two main options. It could temporarily reduce the fuel levy, the tax we pay on every litre of petrol or diesel, or use money already set aside to help bring prices down. Both options cost money, Solomon explained. She said according to National Treasury, the previous fuel levy reduction cost government around R17 billion in lost revenue. Meanwhile, R10 billion has been allocated for another type of relief. "The important thing is that we know it will come at a cost." ALSO READ: Govt finalising policy to protect SA against fuel supply disruptions Solomon estimated that if South Africans used the same amount of fuel as last year, it could mean an extra R120 billion spent on fuel this year. That's money they can't spend on groceries, paying off debt or other essentials. "So all around, it's bad for consumers; it's bad for our treasury. Yeah, it's a cost for everyone." And here's the other thing it is important to remember. Government doesn't earn more tax from petrol just because the price goes up. "Treasury doesn't make VAT on fuel," Solomon explained. Instead, it collects a fixed levy per litre sold. "The fuel levy... doesn't increase because the fuel price increases. The price of fuel doesn't really affect the National Treasury's income." So what about that R10 billion? Solomon said the money had apparently already been set aside and was awaiting approval. "The money has been there for quite some time. The allocation has been made. It's just about actually implementing the allocation." ALSO READ: Expect more festive season pain at the pumps, warns Investec chief economist Never miss a major story. Get breaking news and the latest developments from South Africa and beyond as they happen.