Why the EFF went to court about the fuel levy, a regressive tax that punishes the poor and violates budgetary processes

IOL News

3 days ago

EFF National Chairperson Noluthando Nolutshungu and Mathibe Mohlala, convener of deployers to the Western Cape, outside the Cape High Court where the Party challenged the legality to increase the fuel levy by the Minister of Finance who wants to raise extra revenue.
Image: Ian Landsberg / Independent Newspapers
By Carl Niehaus
On May 21, 2025, South Africa's Minister of Finance, Enoch Godongwana, announced a 16-cent fuel levy increase as part of the revised 2025/26 Budget, breaking a three-year freeze on such levies.
The government claims this will generate R4 billion in revenue, but at what cost? The Economic Freedom Fighters (EFF) have taken a bold stand, filing an urgent court application on May 28, 2025 in the Western Cape High Court to interdict this levy. The EFF argues that it's not only economically disastrous and regressive but also illegal and unconstitutional, as the Minister has bypassed critical budgetary approval processes. Moreover, the EFF's clarion call for a wealth tax offers a progressive alternative to fund public services without burdening the poor. This levy must be stopped, and here's why.
The fuel levy is a direct assault on South Africa's working class and poor, who are already buckling under a relentless cost-of-living crisis. The January 2025 Household Affordability Index paints a grim picture: a minimum-wage worker earns just R4,854.08 per month, with R2,802.97—57.7%—going to electricity and transport alone, leaving a mere R2,051.11 for all other expenses, including food.
Yet, the average food basket costs R5,433.70, leaving these workers short by over R3,000 just to meet basic nutritional needs. In towns like Springbok, a single food basket costs R773.13—more than many can afford even weekly. Now, add the burden of this fuel levy. For a worker already on the edge, this increase could mean the difference between eating and going hungry, between getting to work or losing a job.
The ripple effects of this levy are profound. It will drive up transport costs for commuters relying on taxis, buses, or private cars. It will increase the price of food, as transportation costs cascade through the supply chain, making essentials like bread and vegetables unaffordable for many. It will raise electricity costs, as diesel powers backup generators and critical infrastructure logistics, especially for off-grid communities and businesses. There is no 'zero-rating' escape from fuel costs—this levy will touch every aspect of life, and it's the poorest among us who will bear the brunt. Unlike VAT, which is charged at the point of sale, the fuel levy cascades through the economy, inflating prices at every level, whether you drive or not. It's a regressive tax that deepens inequality, exacerbating an already dire cost-of-living crisis.
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Regional disparities further highlight the injustice. South Africans are already paying up to R2 per litre more than our neighbours due to levies and taxes. In Gauteng, fuel costs R21.40 per litre, while in Botswana it's R19.50, in Lesotho R19.30, and in Namibia R20.67. Why are we being punished while fuel is supplied to these countries at lower rates? This disparity is a slap in the face to South Africans already struggling to make ends meet.
The fuel levy's imposition is also illegal, and it cannot be implemented on June 4, 2025 because the Minister of Finance has bypassed critical budgetary approval processes mandated by South African law and the Constitution. Section 77 of the Constitution requires that any tax or levy, such as the fuel levy, must be introduced through a Money Bill passed by Parliament. This process ensures democratic oversight, transparency, and accountability, involving stages like tabling the budget proposal in the National Assembly, debates, committee reviews, public hearings, and a final vote by both the National Assembly and the National Council of Provinces. As of June 1, 2025, no Money Bill incorporating this levy has been tabled, debated, or passed.
The May 21 announcement left less than two weeks for this process—a timeline that makes compliance with these constitutional requirements impossible. Public hearings, a constitutional necessity, have not occurred, and parliamentary committees have not had the chance to scrutinize the proposal or consult affected communities. This mirrors the unlawful process used in the rejected VAT increase, which the EFF also opposed.
The EFF's court application argues that the Minister's actions violate the Constitution by sidestepping Parliamentary oversight and that the levy disproportionately burdens the poor, violating principles of fairness and equality. The legal challenge also highlights the lack of transparency—no socio-economic impact assessments or public consultations were conducted, and there's no evidence of a progressive fiscal policy review or exploration of alternative revenue sources.
The broader context of the 2025/26 Budget reveals a troubling picture. The EFF, through Senior Researcher Dr. Gumani Tshimomola's presentation to the Joint Standing Committee on Finance on 28 May 2025, has rejected this budget as weak, misguided, and disconnected from South Africans' lived reality. Dr. Tshimomola emphasised that the National Treasury's fiscal framework prioritises neoliberal austerity over the needs of the people, undermining Parliament's constitutional role in budgeting. He stated: 'Parliament must reclaim its constitutional role in budgeting to ensure that fiscal policy serves the people, not the interests of capital.'
He criticised the regressive nature of the fuel levy and the failure to explore progressive alternatives like a wealth tax—a long-standing EFF clarion call. A wealth tax on the richest South Africans would target the top 1%, who hold a disproportionate share of the nation's wealth, to fund public services without burdening the poor. This progressive measure could raise billions to support education, health, and social development, reducing inequality and fostering inclusive growth, unlike the fuel levy, which punishes the most vulnerable.
Dr. Tshimomola's presentation revealed that between the March and May versions of the budget, over R28 billion was cut from non-interest spending, including reductions in education, health, social development, and the criminal justice system. These cuts weaken the state's ability to deliver basic services at a time when unemployment, poverty, and infrastructure collapse are at their worst. This is not a growth budget—it's an austerity budget that prioritises fiscal consolidation over the needs of the people.
The government claims debt will stabilise at 76.2% of GDP, but this comes at the expense of investment in transformative sectors and job creation. South Africa spends over R382 billion annually on servicing a debt of more than R6.2 trillion, with little to show for it. More than 11 million people are jobless, despite the fiscal space to drive labor-absorptive growth. The budget fails to propose state-led industrialisation, doubling down on neoliberal policies that prioritise profit over national developmental interests.
The Standing Committee on Finance's report on the 2025 Fiscal Framework, dated 1 April 2025, supports this critique, noting that the Treasury's austerity measures—through regressive taxes like the fuel levy and cuts to key sectors—hinder socio-economic rights and economic transformation. EFF President Julius Malema has been unequivocal: 'This fuel levy is a tax on the poor, plain and simple. The Minister of Finance is playing a dangerous game with the lives of South Africans, and we will not stand by while he pushes millions deeper into poverty.'
We must ask the Minister: Why impose a levy that's just as destructive as the withdrawn VAT hike? Why not adopt a wealth tax instead?
The EFF demands an urgent review of the fuel levy, transparent alternatives like a wealth tax to fund public services, and immediate relief for working-class families. This is not just a technical change—it's a tax that punishes the poor and violates our Constitution. We call on all South Africans to join this fight—in the courts, on the streets in the picket lines.
The people united will never be defeated, and together, we will achieve economic freedom in our lifetime.
* Carl Niehaus is an EFF Member of Parliament (MP)
** The views expressed do not necessarily reflect the views of IOL or Independent Media.