South African motorists should prepare for fuel tax hikes that are expected to be announced in Finance Minister Enoch Godongwana’s annual Budget Speech tonight, 12 March 2025.
The now-postponed budget, which would have been tabled on 19 February, showed that the Minister had no intentions of increasing the General Fuel Levy (GFL) nor the Road Accident Fund (RAF) Levy for 2025, continuing a relief measure that was first introduced in 2022.
Instead, the previous budget would have relied on a 2% VAT hike to cover government’s financial shortfalls.
However, this proposed VAT increase is largely the reason the first Budget Speech was postponed. As such, all the policies that were mooted in the initial budget were sent back to the drawing board.
With a VAT hike now unlikely to come to fruition after fierce public and inter-government backlash, experts believe that a fuel tax hike is once again on the cards.
What to expect
Road Freight Association (RFA) CEO Gavin Kelly believes that the authorities will increase fuel taxes by a considerable amount this March as they need to recover about R11 billion.
Government collected in and around R84 billion from the GFL in the 2024/25 financial year, a sharp drop versus the R95 billion it raked in the year prior.
The tax is one of the government’s biggest and most important revenue generators, as well as one of the easiest to collect, making it a prime target for recouping losses.
“Raising [the GFL] is one of the options on the table; the questions are, by how much and is Treasury going to try and raise that tax to fill a shortfall,” said Kelly in a Newzroom Afrika interview.
“A R10-billion shortfall in something stable like the fuel levy is a huge knock on Treasury, so I think we’re going to see an increase.”
At present, the GFL is pegged at R3.96 per litre for petrol and R3.84 per litre for diesel, accounting for an average of 19% of the prices at the pumps this March.
Kelly indicates that we can anticipate a “good increase” of these figures during today’s Budget Speech.
“In good, I mean a large increase, because VAT is really just not an option,” he said.
He warned, however, that any increases will have a knock-on effect on the economy as a whole; therefore, authorities must be careful when making this decision.
“Whenever you raise prices upstream, there’s a trickle through, so if we raise, for example, the fuel levy by 50 cents, that could kill the economy totally, it would just become too expensive,” said Kelly.
“And, if we raise the fuel levy by about 10 cents, it’s going have an implication immediately on things like commuter prices, so we’ve got to be very careful; very, very careful what we do.”
Less clear is what’s going to happen with the RAF Levy.
The bespoke tax is earmarked for the Road Accident Fund and used to compensate victims and the families of victims of road-related accidents in South Africa.
It generated an estimated R48 billion in revenue for the RAF in the 2023/24 financial year and is one of the only income sources for the Fund.
The RAF has been in dire financial straits in recent times and have lambasted Treasury’s decision to keep its levy unchanged for three years.
RAF CEO Collins Letsoalo claims that the R2.18 RAF levy has been reduced to R1.93 in real terms due to a lack of adjustment for inflation, which partly explains the entity’s red balance sheets.
The RAF has called on government to start increasing its levy on an annual basis once again so that it can continue fulfilling its public mandate.
Meanwhile, detractors of the scheme have argued that the fundamental way in which the RAF functions should be reworked and that better management must be instated, which should cure its financial woes far more effectively than another levy hike that will be felt by each and every consumer in South Africa.
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