D-Day for petrol taxes in South Africa

It’s widely expected that Finance Minister Enoch Godongwana will hike fuel taxes at his upcoming budget speech taking place today, 19 February 2025.

Organisations such as the Automobile Association (AA) as well as professional services firm Deloitte believes that the time has come for the General Fuel Levy (GFL) and Road Accident Fund (RAF) Levy to see their first increases since 2021.

At present, the GFL is set at R3.84 per litre for diesel and R3.96 per litre for petrol, accounting for approximately 19% of the prices of these fuels.

Meanwhile, the RAF Levy is pegged at R2.18 per litre across the board, representing an average 10% share in local fuel rates.

Speaking to eNCA, AA spokesperson Eleanor Mavimbela said that of these two, the GFL is the more likely levy to be increased.

“For the past three years, the Minister of Finance has not increased the General Fuel Levy; we are anticipating that this year he might actually just increase the General Fuel Levy,” said Mavimbela.

“Whilst we have welcomed the freezing of the General Fuel Levy over the past two years, we do think as the Automobile Association that it’s not a sustainable solution.”

Indeed, in his mid-term budget speech on 30 October 2024, Godongwana noted that government expected a R13.4-billion reduction in fuel levy collections for the financial year, representing a significant chunk of its annual revenue.

It may therefore need to raise the GFL once again to partly plug this hole.

The AA has furthermore requested the Minister to initiate a review of how the price of fuel is calculated.

It previously said a comprehensive, long-term analysis of the components of the fuel price needs to be done as a matter of urgency, and that all calculations relating to the fuel price be audited to determine if they are still relevant and appropriate to South African conditions.

“Continuing with a pricing model because it’s historically the one the country always used doesn’t make sense; questions must be asked if there is a better model available and, if there is, if South Africa we should consider replacing the existing one,” the AA said.

“The AA is of the view that extensive research must be conducted into every single element of the fuel value chain which contributes to the fuel price in South Africa. Alternatives must be sought if any elements are deemed too expensive, and each cent which is being charged must be justified.”

While the new Government of National Unity committed to reviewing the country’s fuel price calculation through a so-called Fuel Price Intervention Plan, it has yet to detail any interventions in the five months since the announcement was made.

Prioritising transport

In addition to fuel taxes, the AA has asked the Minister of Finance to prioritise transport and the nation’s roads in his budget speech.

It wants Godongwana to announce more investment into transport infrastructure as well as road safety initiatives around South Africa.

“When we talk about road infrastructure, we’re talking about initially looking at [existing] roads, especially the in-roads and not necessarily the national roads, the tolled, and the non-toll roads,” said Mavimbela.

The in-roads, she explains, are the roads that most commuters use to get from point A to point B during their daily travels.

Roads in rural areas similarly need more attention than they are getting.

“We believe that [tending to] these roads can result in less damage to vehicles and can also lead to safer roads around the country as well as contribute to economic activity,” said Mavimbela.