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The Citizen
a day ago
- Business
- The Citizen
‘I'm not getting any younger,' says judge as VBS Bank case delayed again
The matter will return to court in 2026. The long-running Venda Building Society (VBS) Mutual Bank fraud and corruption case has once again been delayed, with proceedings now postponed until next year. On Monday, 13 suspects linked to the looting of the VBS appeared before the Gauteng High Court in Pretoria. Among them are former bank executives and several politicians accused of defrauding the collapsed bank of more than R2 billion. ALSO READ: Mayor claims she was exonerated of VBS graft allegations The trial has faced repeated delays, partly due to interlocutory applications brought by some of the accused. Former ANC Youth League (ANCYL) leader Kabelo Matsepe and former Limpopo ANC treasurer Danny Msiza last year sought to have their trials separated or, alternatively, to secure a temporary stay of prosecution, citing delays in the matter. In August 2024, Judge Peter Mabuse granted their applications, but the state appealed the ruling at the Supreme Court of Appeal (SCA). VBS Bank case postponed On Monday, the case could not proceed as more of the accused signalled their intention to also separate their trials, arguing that the drawn-out process is prejudicial. Prosecutor Hein van der Merwe told the court that the state is still awaiting the SCA's response to its petition. He asked for a postponement, while the defence objected, saying it was unfair for some of the accused – many of whom live in Limpopo – to travel to Gauteng only for proceedings to be adjourned. Mabuse nonetheless granted the postponement, though no trial date has yet been fixed. 'In that case, I order that this matter be postponed to 9 February 2026,' the judge ruled. The bail conditions of the accused were extended. Mabuse added light-heartedly: 'Please in the meantime bear in mind that I'm not getting any younger.' State prosecutor Hein van der Merwe at the Pretoria High Court on 14 August 2024. Picture: Gallo Images / Deaan Vivier So far, at least 35 people have been arrested in connection with the scandal, and six convictions have been secured. Among them was last year's sentencing of former VBS chairperson Tshifhiwa Matodzi, who received 15 years in prison for stealing more than R1.9 billion. In addition, liquidators have managed to recover R730 million from the bank's collapse in 2018. The recovered funds will be paid to verified creditors, including municipalities, trade creditors, and retail depositors with balances exceeding R100 000. NOW READ: Rebuild VBS, urges ANC treasurer-general
IOL News
16-06-2025
- Business
- IOL News
A Tale of Two Forces: Fiscal vs Monetary Policy tug-of-war
The fuel levy makes up approximately 6% of the government's total revenue and is the fourth-largest revenue-generating item in the government budget, collecting R730 billion over the past decade. Image: File 'It was the best of days; it was the worst of days.' In recent weeks, South Africa has dominated international news concerning its US-South Africa relations, which nearly overshadowed the outcomes of Budget 3.0 delivered by Finance Minister Enoch Godongwana on May 21, 2025. The VAT increase proposed in Budget 2.0 was revoked and replaced with a fuel levy increase of 16 cents per litre for petrol and 15 cents for diesel. Although considered a necessary evil, the fuel levy increase affects the economy and households similarly to the scrapped VAT increase. This levy follows a 12.74% rise in electricity prices effective from April 1 and precedes a 25 basis-point repo rate cut on the 29th of May 2025, reducing the prime lending rate to 10.75%. Much appears to be occurring simultaneously or in brief bursts, affecting various economic agents in different ways. South Africa is a fuel-importing nation, relying on nearly 80% of its crude oil on imports, which constitutes a substantial part of the country's import bill. Although fuel prices are regulated in South Africa, they remain influenced by market forces, such as the exchange rate and the dollar oil price. While managing fluctuations in international fuel prices is beyond our fiscal control, levies and fees fall within our remit. Video Player is loading. Play Video Play Unmute Current Time 0:00 / Duration -:- Loaded : 0% Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan Transparency Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. Advertisement Next Stay Close ✕ According to the Organisation Undoing Tax Abuse (OUTA), from 2009 to 2014, South Africa's Basic Fuel Price (BFP) was the largest component of domestic fuel prices, ranging between 51% and 58% before decreasing to 30% in 2020. However, taxes and levies have been increasing, accounting for almost 70% of the fuel price in 2020. The fuel levy makes up approximately 6% of the government's total revenue and is the fourth-largest revenue-generating item in the government budget, collecting R730 billion over the past decade. Although it is not the biggest source of government revenue, it generates more revenue than customs duties or alcohol and tobacco excise duties, which should have been the sacrificial lamb protecting the local market. As reported by the Department of Mineral Resources and Energy (DMRE), in December 2021, the price of inland 95-octane petrol stood at R20.29, comprising a basic fuel price of R9.74 (48%), taxes and levies of R6.67 (33%), retail and wholesale margins of R2.74 (14%), and storage and distribution costs of R1.14 (6%). The Road Accident Fund levy of R2.18 (1%) was not included. South Africa's fuel prices are heavily influenced by levies and taxes rather than by global market fluctuations. According to the Stats SA 2021 report, there are 13 different charges depending on the type of fuel and one's place of residence. Are we undermining our economy by self-sabotaging? The South African Petroleum Industry Association (Sapia) reports that fuel prices rose by 21% in 2017/2018, leading to cost-push inflation and economic growth falling below 1%. This latest levy increase is likely to have a similar impact in an already frail economic environment. Higher electricity and fuel prices raise production and operational costs, leading to a decrease in aggregate supply, as businesses rely on the transportation of goods for production and retail purposes. This ultimately results in lower output, which, in turn, affects employment, wages, and investment as firms implement cost-containment measures to remain productive. As businesses pass the burden onto consumers by charging higher prices for their products and services, this leads to cost-push inflation pressures that alter spending behaviour, as consumers make trade-offs between food, repaying debt, electricity, commutes, and other essential household expenses. Consequently, aggregate demand in the economy will dampen as disposable income is eroded, thereby hindering economic growth. Although businesses and consumers were cushioned by the R1.27 drop in the basic fuel price shortly after the increase in the fuel levy, in the long term, the higher levy undermines South Africa's economic growth. An additional financial relief for consumers was a 0.25% reduction in the prime rate from 11% to 10.75%. Although this interest rate reprieve was moderately welcomed by South Africans, if higher fuel levies drive inflation, the South African Reserve Bank (SARB) may hesitate to cut rates further, limiting growth stimulus. Additionally, a fuel levy hike raises costs immediately, while rate cuts have a lag effect, thus taking time to stimulate growth. Rate cuts benefit indebted middle-class borrowers, boost borrowing, encourage business expansion, and stimulate economic activity, but do not offset fuel inflation for the poor. The fuel levy increase risks hurting short-term growth and rising inequality, disproportionately affecting low-income earners and households. These two policy decisions have opposite impacts. The fuel levy hike increases inflation, thereby reducing economic activity, while an interest rate cut spurs growth. To counter this challenging balancing act, the economy must grow at a higher rate to increase tax revenues and productive government spending. A higher growth rate will create jobs, reducing the number of economically inactive workers who rely on social grants as they shift to personal taxpayers. Growth also signifies positive business performance. This will broaden the tax base as more individuals gain employment, diverting the government's spending from social grants to more growth-enhancing initiatives. Moreover, corporate taxes will also increase. Very little can be accomplished with the low growth rate of 0.6% recorded in 2024 and 0.1% during the first quarter of 2025. If growth continues on this downward trajectory, government revenue and public expenditure will remain constrained.
