Budget speech: Godongwana makes call on fuel levy

After much debate about whether Finance Minister Enoch Godongwana would announce an increase in the fuel levy on Wednesday, motorists may be able to breathe a sigh of relief.

Godongwana delivered the revised budget speech, following February’s postponement due to disagreement over a proposed 2% Value-Added Tax (VAT) increase.

In it, he announced the decision not to increase the fuel levy, saying it was made to help South Africans cope with the high cost of living.

What is fuel levy?

Fuel levy is a tax charged on every litre of fuel sold, with a portion going to the general government (General Fuel Levy) and another to the Road Accident Fund (RAF levy) to compensate victims of motor vehicle accidents. 

The General Fuel Levy amounts to 18% of the retail price, while the RAF Levy is about 10%.

The general fuel levy has remained unchanged since 2022 to mitigate the effects of higher inflation resulting from fuel price increases.

ALSO READ: Cutting fuel levies: government all talk, no action – Outa

How much is fuel levy?

With the recent fuel price hike, the fuel levy is R3.96 per litre, and the RAF levy is R2.18 per litre of 95 petrol.

R6.14 in taxes is included in every R22.41 spent per litre of 95 petrol.

“We are not increasing the fuel levy for another year, saving consumers around R4 Billion,” said Godongwana.

Demand for fuel decline

The National Budget Review document details that fuel demand fell during the 2024/2025 (March 2024 to February 2025) financial year, and fuel levy collections declined by 6.5% over the first 11 months of the year.

“Volumes of domestic and imported diesel contracted as load shedding subsided.

“Significant diesel refund claims will be settled by the end of 2024/25, further reducing fuel levy collections.”

ALSO READ: Almost R140 billion paid out by Road Accident Fund in three years

Movement of fuel products

The document also outlines that the fuel industry in South Africa has increasingly shifted from local manufacturing to importing refined petroleum products such as petrol, diesel, illuminating kerosene and aviation kerosene.

“Companies importing fuel levy goods highlighted the challenges they encounter in moving imported products (especially aviation kerosene) through the national multi-product pipeline.

“SARS proposes to review the legislation pertaining to the fuel industry to align it with changes in this industry and to facilitate the movement and storage of fuel products.”

NOW READ: Budget speech: VAT increases by 0.5%, with another 0.5% hike next year