Budget 3.0: First fuel levy increase in three years – Here's by how much
The general fuel levy will increase by 16 cents per litre for petrol, and by 15 cents per litre for diesel.
Finance Minister Enoch Godongwana's third attempt at delivering the budget speech brought an unwelcome surprise for motorists. He announced the fuel levy will increase for the first time in three years.
Godongwana, while delivering the budget on Wednesday in Cape Town, stated that the levy increase is the only new tax proposal he is announcing in the latest version of his budget.
'It remains vital that we still take actions to increase revenue to protect and bolster frontline services, while expanding infrastructure investments to drive economic activity.
'To this end, this budget proposes an inflation-linked increase to the general fuel levy.'
ALSO READ: Budget 3.0: Alcohol and cigarette prices will increase — here's by how much
How much will the fuel levy increase by?
Godongwana said the general fuel levy will increase by 16 cents per litre for petrol and 15 cents per litre for diesel. This will take effect from 4 June 2025.
He, however, did note that this alone will not close the fiscal gap over the medium term.
In the second budget speech delivered on 12 March 2025, Godongwana did not increase the fuel levy, stating that the decision was made to help South Africans cope with the high cost of living. However, he has made a U-turn after scrapping the value-added tax (VAT) increase.
ALSO READ: Cutting fuel levies: government all talk, no action – Outa
What is the fuel levy?
The fuel levy is a tax charged on every litre of fuel sold, with a portion going to the government and another to the Road Accident Fund (RAF levy) to compensate victims of motor vehicle accidents.
The levy amounts to 18% of the retail price, while the RAF levy is about 10%.
This has remained unchanged since 2022 to mitigate the effects of higher inflation resulting from increased fuel prices.
Why the increase?
The increase is intended to aid in revenue collection. He said the aim of the previous budget made on 12 March was to balance the necessity of growing the economy with the equally urgent need to repair and rebuild our public finances.
Tax revenue projections have been revised down by R61.9 billion over the three years. 'This reflects the reversal of the VAT increase and the much weaker economic outlook.'
NOW READ: Godongwana cuts government spending to offset VAT shortfall
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