Finance Minister Enoch Godongwana has stated that the government is working towards cutting out the general fuel levy in South Africa.
In addition to this, work is also taking place to deregulate the price of petrol and diesel in the country.
Godongwana made the statements in an interview with the Sunday Times.
“We are taking the fuel levy completely out, but it cannot be done in one financial year – that would throw the fiscal framework off by R90 billion,” said the minister.
The R90 billion referred to is the amount of money the government would lose if the fuel levy is removed.
Plans to find this money elsewhere include adding taxes to vehicle licence renewals.
The move to cut taxes and deregulate the price of fuel comes at a time when petrol prices are at record highs in South Africa – with a litre of 95 petrol expected to be over R22.00 in the coming weeks.
Tax holiday
Godongwana’s statement follows the recent announcement of a fuel “tax holiday”.
From 16 April to 31 May 2022, the general fuel levy will see a temporary reduction of R1.50 a litre.
This sees the levy reduced as follows:
- Petrol – From R3.93/litre to R2.43/litre
- Diesel – From R3.79/litre to R2.29/litre
This was done to keep fuel prices in South Africa down, making it more affordable for motorists to use their vehicles.
The tax holiday and planned cutting out of the fuel levy are nothing new, however, and have been previously touted as a way to lower petrol prices.
The amount of tax South Africans pay each time they put fuel in their cars has increased substantially over the past 10 years, and is not sustainable, OUTA CEO Wayne Duvenage said in April last year.
“When one looks back at the trends of these various additional levies and what lies ahead for the sale of petrol and diesel in a changing vehicle propulsion environment, these additional taxes and levies appear to be unsustainable,” said Duvenage.
The graph below shows how taxes on fuel prices have increased in South Africa from 2008 to 2021.
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