Task team to assess the fiscal regime applicable to windfall profits in the liquid fuels sector
In the mid 2000s, oil prices increased dramatically as demand from Asia increased and spare production capacity in the Middle East, especially in Saudi Arabia, declined. Increased oil prices had a negative impact on the South African economy, but at the same time ensured that local synthetic fuel producers, especially Sasol, made large profits. Calls from a number of sectors questioned whether these profits should be viewed as windfalls which should possibly be clawed back by means of fiscal policy measures.
In the February 2006 Budget, Minister of Finance Trevor Manuel announced the appointment of a task team to investigate whether windfall profits were being generated by the liquid fuels industry, in particular the synthetic fuels industry, and whether a windfall tax should be imposed if such profits existed. Grové Steyn was subsequently appointed as a member of the Task Team by the Minister of Finance. The final report was delivered to the Minister of Finance in February 2007.