
National Treasury has revised its annual projected income from fuel levies for the 2024/25 period from R95.8 billion to R82.4 billion, announced Finance Minister Enoch Godongwana during his mid-term budget speech (MTBPS) on 30 October.
This means government expects to make R13.4 billion less from fuel levies this year than it initially anticipated.
Commenting on the revision, Godongwana said: “Net fuel levy collections contracted by 3.9% compared to the same period in 2023/24 as fuel demand fell sharply.”
“Lower projected fuel levy collections are also affected by a large once-off diesel refund payment expected to be settled this year.”
The drop in demand for fuel could be attributed to several elements, from the cost-of-living crisis driven by high levels of inflation and fuel prices, to an improvement in public transport services including buses and trains as well as the growth of e-hailing services.
Meanwhile, the diesel refund payment refers to a relatively recent policy instrument.
Last year, government launched a refund of the Road Accident Fund (RAF) Levy for diesel specifically used by farmers and food producers for their backup power equipment in an effort to reduce the burden of load-shedding on these vital sectors.
The system took effect in April 2023 and will continue until 31 March 2025, with National Treasury expecting to pay R9 billion in refunds in the 2024/25 financial year as a consequence of the policy.
This amounts to 9.4% of the R95.8 billion it expected to earn from fuel levies in the full year.
Petrol tax hikes kept at bay
In a welcome turn of events, Godongwana made no adjustments to the GFL nor the RAF Levy during the MTBPS despite civil action organisations warning motorists to brace for such.
In February, it was announced that the GFL and RAF Levy would remain unchanged for the third consecutive year owing to the substantial burden these taxes put on motorists.
However, the Organisation Undoing Tax Abuse (Outa) warned that this move may only have been made as part of the then-ruling ANC party’s electioneering efforts, but that tax hikes could be effected during the MTBPS which at the time was six months away.
“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 [MTBPS],” said Outa.
Furthermore, the RAF implored Treasury to increase its bespoke levy as the entity claims not doing so leaves it short of vital funding needed to fulfill its public mandate.
It said the R2.18/litre levy has effectively been reduced to R1.93 in real terms due to a lack of adjustment for inflation since 2022, which partly explains the R1.5-billion deficit the RAF recorded in the 2023/2024 financial year.
Despite this, Godongwana didn’t announce any adjustments for the GFL or RAF Levy during the MTBPS.
Join the discussion