Motorists were recently hit with the bad news that petrol taxes will be increased, but it could have been even worse.
On Wednesday, 21 May 2025, Finance Minister Enoch Godongwana delivered his revised National Budget Speech, which outlined the government’s plans to make up for its financial shortfalls.
One of the most important announcements to come out of the Budget Speech was that the government would raise the General Fuel Levy (GFL) for the first time in three years.
The government was previously set to hike VAT raise funds without directly affecting the price of fuel, but this plan received widespread backlash from the public and political parties.
Consequently, the GFL will now be raised to make up for the scrapped VAT proposal.
While this will undoubtedly raise the cost of transport across South Africa, the silver lining is that the GFL is the only major tax on fuel that is going up.
The second largest tax placed on fuel is the Road Accident Fund (RAF) levy, but this was left untouched despite previous calls to raise it.
One less increase to worry about
The GFL and the RAF levy are the two biggest contributors to South Africa’s fuel tax, which makes up a considerable portion of the final amount you’ll see advertised at petrol stations.
These taxes are typically adjusted in February each year to account for inflation, but they were both frozen in 2020 as part of the government’s Covid-19 economic relief measures.
However, this grace period has come to an end, as the government has finally decided to once again raise the GFL.
“The general fuel levy has remained unchanged for the past three years to provide
consumers with relief from high fuel price inflation,” said Finance Minister Enoch Godongwana.
“To replace a portion of the lost revenue from the withdrawal of the VAT rate increases, government proposes an inflationary increase in the general fuel levy for petrol and diesel.”
The RAF levy, on the other hand, is unchanged, which is good news for motorists and bad news for the Road Accident Fund.
The RAF has been facing financial difficulties for several years now, owing to the high cost of payouts for road accident victims and the method by which it operates, which often results in lengthy court battles.
The state-owned entity previously revealed that a single case can cost taxpayers around R2.57 million, and that it paid out R43 billion for incidents that occurred between 2020 and 2022.
All of this is funded by the RAF levy, which adds R2.18 to every litre of petrol and diesel sold in South Africa.
RAF CEO Collins Letsoalo has argued that the R2.18 levy has been reduced to R1.93 in real terms due to a lack of adjustment for inflation, and that this is one of the reasons why the organization is struggling financially.
Even so, the RAF levy has not been adjusted for 2025, while the GFL has gone up by 16c per litre for petrol and 15c per litre.
It’s also worth noting that the Carbon Levy, which is an add-on to the GFL, was raised by 3c per litre in April, which means the GFL has technically gone up by 19c and 18c for petrol and diesel, respectively, since the start of the year.
This means that, from June onwards, the GFL will contribute R4.01 per litre for petrol and R3.85 per litre for diesel.
In other words, 18.7% of the cost of petrol and 20.3% of the cost of diesel is the result of a single tax, which is why it’s significant that the nation’s second largest fuel levy was not increased as well.
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