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Friday / 24 May 2024
HomeFeaturesGovernment’s massive petrol tax payday

Government’s massive petrol tax payday

Between 2014 and 2024, the South African government raked in over R730 billion in revenue from the General Fuel Levy (GFL), making the tax the fourth-largest revenue item in the state’s budget.

In the 2023/2024 financial year alone the GFL generated a massive R93.37 billion in revenue marking an increase of 92% in one decade, an analysis by Daily Investor showed.

The GFL goes directly to the National Treasury and may be used to fund any general government expenditure programmes.

At the start of March 2024, the GFL is set at R3.95 per litre of petrol and R3.81 per litre of diesel; it is therefore the single largest tax placed on local fuels, accounting for around 63.5% of all tariffs.

In terms of the prices we see at the pumps, the GFL is responsible for between 16-17%, depending on the type of propellant.

The below graph shows how the government’s GFL-based revenue has risen over the last 10 years.

Source: Daily Investor

No fuel tax changes… for now

In finance minister Enoch Godongwana’s annual budget speech in February, it was announced that government would halt rate hikes to the GFL and and Road Accident Fund (RAF) Levy for 2024 in light of the rising cost of living putting pressure on household spending.

The Carbon Fuel Levy will, however, increase from 10c/litre to 11c/litre for petrol, and from 11c/litre to 14c/litre for diesel, at the start of the next financial year in April.

A welcome announcement indeed, but many industry experts have since sounded the alarm on potential fuel tax adjustments coming during the minister’s Medium-Term Budget Policy Statement later in the year, stating that the GFL and RAF Levy weren’t increased in February because we are currently in an election season when political parties will do and say just about anything to secure voter preference.

Speaking to MyBroadband, the Organisation Undoing Tax Abuse (Outa) said that it does not believe that tax halts will last until 2025 because the government does not have the budget to continue supporting motorists in this way, and the GFL and RAF Levy are two of the easiest taxes to collect.

“Outa is of the opinion that this is an election year, and as such the budget was an election budget but due to the fiscal constraints SA’s budget is facing, [the taxes] will probably increase in the [medium-term budget],” it said.

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