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Treasury defends fuel levy increase
Treasury defends fuel levy increase

Eyewitness News

time5 days ago

  • Business
  • Eyewitness News

Treasury defends fuel levy increase

CAPE TOWN - The Treasury has defended an increase in the fuel levy, saying if it doesn't raise it in line with inflation, it would become worthless over time. The fuel levy has been left unchanged for three years to mitigate the impact of high oil prices at the time it was frozen. The Economic Freedom Fighters (EFF) is going to court next week to challenge the legality of imposing an increase as part of the national budget, saying that the finance minister had failed to issue a government notice to this effect, nor had he introduced a bill in Parliament. The price of petrol will increase by at least 16 cents per litre on Wednesday. ALSO READ: • Ntshavheni says EFF free to challenge national budget in court • EFF accuses finmin of 'undermining' Parly in court papers seeking to stop fuel levy hike • MPs say impact of fuel levy increase will be 'far worse' than VAT hike • EFF accuses Treasury of replacing VAT increase with fuel levy hike • Automobile Association slams new fuel levy hike The Treasury said that increasing the value-added tax (VAT) rate could not be equated with raising the fuel levy. Responding to public submissions on the budget in Parliament on Friday, Treasury's head of tax policy, Chris Axelson, said that the fuel levy was the country's fourth-largest revenue source, contributing about five percent to total tax revenue. "This is a specific tax, a cents per litre, so these kinds of specific tax, which is the same as excise duties, they need to be adjusted by inflation, otherwise the real value of that tax will go down over time." Axelson said that by not adjusting the fuel levy, Treasury would lose about R3.5 billion in revenue. "The vast majority of the tax revenue increase is all on the personal income tax side. Around R16.7 billion of the R18 billion in increases is all on personal income tax." While the finance minister is empowered through the Customs and Excise Act to implement an interim fuel levy adjustment by a notice in the gazette, Parliament can intervene to change the duration before it's formalised in the taxation act.

Opposition mounts against fuel levy hike
Opposition mounts against fuel levy hike

The Citizen

time27-05-2025

  • Automotive
  • The Citizen

Opposition mounts against fuel levy hike

Effective from June 4, the General Fuel Levy (GFL) will be increased by 16 cents per litre for petrol and 15 centre per litre for diesel. The AA has warned that despite it not being increased in the past three years, this will be a bitter pill to swallow for cash strapped South Africans. Looking for a new or used vehicle? Find it here with CARmag! Finance Minister Enoch Godongwana announced the hike as the sole new tax measure in the 2025/26 fiscal year, attributing it to inflationary pressures. He emphasised that the adjustment is necessary to address fiscal challenges, especially after the government scrapped a proposed VAT increase earlier this year. Since the South African government's decision to increase the GFL, widespread concern has arisen among motorists, industry stakeholders, and opposition parties. The Automobile Association (AA) has expressed strong opposition to the levy increase, warning of its immediate and far-reaching consequences. 'This levy adjustment comes at a time when South Africans are already contending with high food prices, elevated interest rates, increased electricity tariffs, and persistently high unemployment,' the AA stated. Related: All-New Honda Amaze Lands in SA – Pricing and Spec The AA further highlighted that with the new adjustments, the combined cost of the GFL and the Road Accident Fund (RAF) Levy will exceed R6 per litre in some areas, accounting for more than 30% of the total pump price before adding the base fuel cost, distribution margins, and retail markups. At the highest level of opposition, political parties have also voiced concerns. Members of Parliament from various parties argued that the fuel levy increase is a regressive tax that disproportionately affects lower-income households. They accused the National Treasury of replacing the scrapped VAT hike with the fuel levy increase without considering alternative revenue proposals, such as wealth taxes. In response to the backlash, the National Treasury clarified that the fuel levy increase is in line with expected inflation of around 4% and is not intended to replace the VAT increase. Chris Axelson, the acting head of tax and financial sector policy at the Treasury, stated that the fuel levy adjustment is expected to generate approximately R4b, significantly less than the R75b anticipated from the proposed VAT hike. Related: Toyota Celebrates 40 Years at Le Mans With Throwback Liveries Despite the levy increase, motorists may experience a slight reprieve in June fuel prices due to favourable market conditions. Data from the Central Energy Fund indicates an over-recovery of 19 cents per litre for petrol and 48 cents per litre for diesel, which could offset the impact of the levy hike. Related: Fuel Price Reprieve All But Confirmed for June 2025 The AA continues to call for a comprehensive and transparent review of South Africa's fuel pricing model, including a forensic audit of revenue generated from the GFL and RAF Levy, full transparency on the fuel price-setting formula, and exploration of alternative funding mechanisms that reduce reliance on fuel-based taxation. Click here and browse thousands of new and used vehicles here with CARmag! The post SA Minister of Finance Plans General Fuel Levy Increase – AA Warns Against It appeared first on CAR Magazine.

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