INTRODUCTION
In common with fiscal practice in most countries of the world, taxes on petrol, diesel and other liquid fuels provide a huge portion of South African government revenue. In South Africa's case, fuel levies provide nearly a tenth of total income from all taxation sources  more than the entire allocation of funds to the provinces of Gauteng or the Western Cape.
While liquid fuel is favoured as a cost-effective and rational (user-pays principle) tax source, this has delicate and complex ramifications, for the price of fuel affects every private individual, every business, and ultimately the national economy as a whole.
With the national interest in mind, Sapia established an Oil Industry Fuels Indirect Taxation Advisory Service. It was also instrumental in creating the Advisory Body for Indirect Taxation of Petroleum Products, a committee on which several government departments, the oil industry and occasionally other interests are represented. This consultative body is currently dealing with a number of sensitive fiscal issues. Here are three examples:
JUSTICE FOR DIESEL USERS
While the tax on petrol in South Africa compares favourably with most countries, the same cannot be said about the way agriculture, forestry, fishing and mining are taxed on diesel. No tax relief is given at all to these primary industries, so that they are at a disadvantage when striving to compete on the world market  and their prices of domestic products are higher than need be.
There are other inequities. For instance, while South African trawlers have to pay tax on fuel, foreign fishing vessels  even those operating in South African waters  enjoy full tax rebates. Indeed all South African "off-road" industries, such as shipping, offshore oil exploration, forestry, mining and farming have to pay full taxes on diesel  including road-user levies such as the 10,3 c/l for the Road Accident Fund!
Representations have been made to the Advisory Body for Indirect Taxation and the Planning Division of the Department of Finance has investigated the matter and recommended that the tax system be changed to get rid of inequities, encourage international competition, and stimulate economic growth in the industries concerned. Relevant government departments, in consultation with the oil industry, are looking at means of implementing a new diesel tax rebate policy as soon as possible.
Linked with this is the question of whether it will be in the national interest to widen, across the board, the tax difference between petrol and diesel. This has implications for public transport (including minibus taxis) and potentially for greater efficiency in overall energy use. Government in consultation with the oil industry is drawing up terms of reference for an inquiry into a proposed wider tax differentiation.
DIESEL TAX EVASION
An estimated R300 million a year is being lost in government revenue through the illegal practice of mixing illuminating paraffin with diesel to make a lower-taxed substitute for motor fuel. To detect this offence, oil companies will soon be required to add a special chemical marker to all illuminating paraffin and certain kerosene-type solvents. This will enable Customs agents, using a simple test kit, to track down offenders. The measures should also protect unsuspecting fuel users whose expensive tractors, trucks and other equipment can be damaged by using inappropriate fuel mixtures sold to them by unscrupulous distributors.
AVIATION FUELS
The restructuring during 1998 of the South African Civil Aviation Authority also empowered it to impose "user charges" for the cost of its services previously funded from general government revenue. This included the imposition of a levy on aviation fuels, the nature of which created problems for airlines and their suppliers. These issues were referred to the government/oil industry Advisory Body on Indirect Taxation of Petroleum Products, and were ultimately resolved after considerable effort in consultation with all the role players.