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The Citizen
13 hours ago
- Business
- The Citizen
Fuel levy hike about to hit: Will you survive the squeeze?
General levy for petrol and diesel will be increased to R4.01 per litre and R3.85 per litre, respectively. Tough times are ahead for South Africans, as the fuel levy increase takes effect on Wednesday, 4 June. Many would believe that the fuel levy hike will impact only those who own cars; however, it will affect everyone, as businesses may need to increase the prices of products and services to offset the costs incurred by the hike. Finance Minister Enoch Godongwana announced the increase in his third budget speech in May. General levy for petrol and diesel will be increased to R4.01 per litre and R3.85 per litre, respectively. However, the EFF has approached the Western Cape High Court in an attempt to interdict this increase. This is the first time in three years that the minister announced the increase. In previous budget speeches, he had reserved the right to increase the fuel levy, as he did not want to burden South Africans who were already struggling to cope with the high cost of living. ALSO READ: VAT reversal overshadowed by fuel levy hike Why increase the fuel levy? Godongwana's decision to increase the fuel levy comes after his decision to increase the Value Added Tax (VAT) was met with criticism and was sent back to the drawing board to find an alternative that would not significantly harm consumers' wallets. VAT was supposed to increase by 0.5% this year and by another 0.5% next year. This meant that everyone would be directly impacted, as every product and service was set to increase in price. However, the government would be able to collect the necessary revenue. When it comes to the fuel levy hike, not everyone is directly impacted. However, everyone will be squeezed sooner or later. The Treasury estimates that it will generate an additional less than R4 billion, which is significantly lower than the revenue estimated from the now-withdrawn VAT increase. How will the fuel levy hike impact consumers? Professor Bonke Dumisa, an independent economic analyst, told The Citizen that if the EFF's court challenge fails, the fuel levy hike will result in inflationary pressures. 'The logistics sector will pass on the increased fuel prices to the end-users, which in turn will have the same negative effects as the implementation of the earlier proposed 2% VAT increase or the later proposed 0.5% VAT increase this tax year and another 0.5% VAT increase next tax year.' 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. It amounts to 18% of the retail price, while the RAF levy is about 10%. ALSO READ: Godongwana punished taxpayers in Budget 3.0 despite calls not to Is the increase really bad? Professor Waldo Krugell, an economist at the Faculty of Economic and Management Sciences at the North-West University (NWU), told The Citizen the impact of the fuel levy hike will not be that bad. 'It appears that the impact will be mitigated by a lower basic fuel price. The relatively low crude oil price and a stronger rand-dollar exchange rate are helping to keep the pump price stable and maybe even a bit lower again this month.' Based on current over-recovery trends, consumers should consider themselves lucky if petrol sees a marginal decrease of 3 cents per litre in June. There is even the possibility that the fuel levy increase could result in a small hike in petrol prices if the rand weakens or global oil prices rise further this week. Legal battle The EFF previously successfully opposed the VAT increase in court, and it is hoping for the same result in the court case. In the paper filed, the party outlined that the fuel levy increase will harm the poorest in South Africa and undermine economic growth. 'We took this action after repeated efforts to caution the minister and appeal to his conscience failed. We wrote to the Minister, urging him to consider the impact of this increase on the poor and working-class people of South Africa, especially during a time when the cost-of-living crisis is deepening. 'We also reminded him that, just like the VAT increase, raising the fuel levy without introducing a proper Money Bill is unlawful and undermines parliamentary oversight,' the EFF said. NOW READ: Budget 3.0: Fuel levy replaced VAT hike but is it the better option?
IOL News
27-05-2025
- Business
- IOL News
EFF slams 4% fuel levy hike, warns of economic inequality
Finance Minister, Enoch Godongwana faces pressure as political parties wants him to relook the proposed fuel levy. Image: Armand Hough / Independent Newspapers Economic Freedom Fighters (EFF) have formally challenged the proposed 4% fuel levy increase announced by Finance Minister Enoch Godongwana in Budget 3.0, raising constitutional and legislative concerns over its validity. In a strongly worded letter addressed to the Minister, the EFF firmly rejected the proposal, citing its disproportionate impact on the poor and working-class communities. The party has also written to National Assembly Speaker Thoko Didiza and the Chairperson of the Parliamentary Standing Committee on Finance, calling for an urgent inquiry into the legality and socioeconomic implications of the proposed levy. The proposed increase — the first since the 2021/22 fiscal year — would raise the fuel levy by 16 cents per litre for petrol and 15 cents for diesel, pushing the rate from R3.85 to R4.01 per litre. According to the National Treasury, the hike is expected to generate R23 billion over the next three years, offering modest fiscal relief following the abandonment of a VAT increase that would have yielded R75 billion. The EFF contended that the fuel levy, as a flat consumption tax, is inherently regressive and exacerbated economic inequality. Video Player is loading. Play Video Play Unmute Current Time 0:00 / Duration -:- Loaded : 0% Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan Transparency Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. Advertisement Next Stay Close ✕ Ad Loading According to the National Treasury, if all this goes well, it will generate R23 billion over three years — a far cry from the R75 billion that would've come from the scrapped VAT hike, but still a meaningful boost in a tight fiscal climate. The EFF argued that this will impact on the costs of transporting goods and services, which leads to increases in costs of food. 'In a society where over 18.2 million people are recipients of social grants, and nearly 45% of the population lives below the upper-bound poverty line, the increase in the fuel levy will have an immediate and cascading effect on the cost of living. 'Unlike income taxes, the fuel levy is a consumption-based tax. It is not linked to income or wealth, and therefore applies uniformly across all income groups, regardless of ability to pay,' the party said in a statement. 'The impact is particularly severe in areas where household expenditure on transport and food exceeds 50% of income—a situation affecting the vast majority of social grant recipients and informal workers.' Meanwhile, members of parliament (MPs) have raised concerns over the National Treasury's decision to increase the fuel levy, arguing that its economic impact may be significantly more severe than a hike in value-added tax (VAT). IOL Politics
The Citizen
26-05-2025
- Business
- The Citizen
Fuel levy pain: Brace for possibility of petrol price hike in June
The first fuel levy increase in three years will come into effect in June. Here's how it will affect petrol and diesel prices. The projected decrease in petrol and diesel prices for June has been slimmed down by Treasury's hike in the fuel price levy. Picture: iStock South African motorists will feel the impact of the fuel levy increase at the pumps when the official price changes for petrol and diesel kicks in on Wednesday, 4 June. Budget 3.0's inflation-based general fuel levy (GFL) hike will see petrol prices increase by 16 cents to R4.01, while diesel tax will rise by 15 cents to R3.85. Based on current over-recovery trends, consumers should consider themselves lucky if petrol sees a marginal decrease of 3 cents per litre in June. There is even the possibility that the fuel levy increase could result in a small hike in petrol prices if the rand weakens or global oil prices rise further this week. June fuel price: Expected changes in petrol, diesel and paraffin According to the latest data released by the Central Energy Fund (CEF), over-recoveries of 19 cents per litre are on the cards for petrol prices and 48 cents per litre for diesel. Petrol 93: Decrease of 20 cents per litre. Decrease of 20 cents per litre. Petrol 95: Decrease of 19 cents per litre. Decrease of 19 cents per litre. Diesel 0.05% (wholesale): Decrease of 48 cents per litre, Decrease of 48 cents per litre, Diesel 0.005% (wholesale): Decrease of 49 cents per litre. Decrease of 49 cents per litre. Illuminating paraffin: Decrease of 52 cents per litre. When factoring in the 15 cents and 16 cents per litre of the GFL increase for diesel and petrol, the respective decreases are slimmed down to 33 cents and 3 cents. Petrol 93: Decrease of 4 cents per litre. Decrease of 4 cents per litre. Petrol 95: Decrease of 3 cents per litre. Decrease of 3 cents per litre. Diesel 0.05% (wholesale): Decrease of 33 cents per litre. Decrease of 33 cents per litre. Diesel 0.005% (wholesale): Decrease of 34 cents per litre. Fuel price explainer The fuel levy increase raises the total tax on petrol to R6.37, factoring in the R2.18 Road Accident Fund (RAF) levy, which remains unchanged, as well as the 14 cent carbon tax penalty and four cent customs and excise duties. Current petrol and diesel prices Following May's fuel price decreases, a litre of 93 unleaded petrol costs R21.29 per litre, while 95 unleaded costs R21.40. The wholesale price of 0.05% diesel stands at R18.93 per litre and 0.005% at R18.91. Why is Treasury hiking the fuel levy? Finance Minister Enoch Godongwa announced in his third Budget Speech last week that the only new tax proposal would be an inflation-based increase in the GFL for the 2025/26 fiscal year. Any increase in international fuel prices or a weakening in the rand-dollar exchange rate could cause the 5c to melt away over the next week. The revised 2025 budget is the minister's third official attempt to balance the country's finances since February's contested speech. ALSO READ: VAT reversal overshadowed by fuel levy hike R61.9 billion shortfall While the previously announced 1% Value Added Tax (VAT) hike falls away following pressure from within the ranks of the government of national unity (GNU), Treasury now has an additional R61.9 billion shortfall to fund over the next three years. Frank Blackmore, lead economist at KPMG South Africa, said the proposed fuel tax hike represents an inflationary increase of 4% in the fuel price, which is larger than the proposed VAT increases. READ NOW: Budget 3.0: Fuel levy replaced VAT hike but is it the better option?
The Citizen
22-05-2025
- Automotive
- The Citizen
June fuel levy price shock incoming – Here's why you'll be paying more
Get ready to dig deeper into your pockets. Motorists will feel the pinch at the pumps as the government ends its three-year freeze on the fuel levy, a move aimed at helping plug the country's growing budget deficit. In the latest iteration of his 2025 budget speech on Wednesday, Godongwana announced the general fuel levy (GFL) would be increased 16c/l for petrol and 15c for diesel when the next monthly fuel price adjustment is made on June 4. Also read: Pretoria braces for four-day water outage — Is your area affected? It's one way Godongwana plans to fund the budget shortfall this financial year. He's also warning that further tax proposals are in the pipeline for 2026. As from next month, the general fuel levy on petrol will increase by 16 cents to R4.01 per litre. The levy on diesel will go up by 15 cents to R3.85 per litre. 'For the 2025/26 fiscal year, this is the only new tax proposal that I'm announcing. This is the first fuel levy increase in three years. Cut and join with the next line. Unfortunately, this tax measure alone will not close the fiscal gap over the medium term.' Meanwhile, the Automobile Association (AA) has slammed a new fuel levy hike, warning that the move will drive up transport costs, push food prices higher, and place more pressure on already struggling households. '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. 'Fuel is a critical input cost across all sectors of the economy; any increase inevitably drives up transport and operational costs, further intensifying inflation.' It furthermore said the total tax taken from fuel, including the Road Accident Fund (RAF) levy, would now exceed R6 per litre in some areas, making up over 30% of the pump price before the actual fuel cost is even factored in. The AA calls for a forensic audit into how these funds are spent. It calls for a transparent overhaul of South Africa's fuel pricing system, including a forensic audit of fuel levy revenues, full disclosure of the pricing formula, stakeholder engagement, and exploration of alternative, less fuel-dependent funding models. Also read: Watch: Snowfall confirmed – Here's what it means for Pretoria Do you have more information about the story? Please send us an email to bennittb@ or phone us on 083 625 4114. For free breaking and community news, visit Rekord's websites: Rekord East For more news and interesting articles, like Rekord on Facebook, follow us on Twitter or Instagram or TikTok. At Caxton, we employ humans to generate daily fresh news, not AI intervention. Happy reading!
Eyewitness News
21-05-2025
- Business
- Eyewitness News
Budget 3.0: Fuel levy will increase again in June, reveals Godongwana
CAPE TOWN - While an increase in value-added tax (VAT) is definitely off the table, you will be paying more for fuel. After a three-year freeze, the fuel levy will increase again on 4 June 2025. It's one of the ways Finance Minister Enoch Godongwana is planning to fund the budget shortfall in this financial year. He's also warning that further tax proposals are in the pipeline for 2026. ALSO READ: On average, fuel prices decreased by 3.2% between March and April - Stats SA Following political backlash and legal contestation, there will be no VAT increase in this third iteration of the 2025 budget. However, one of the trade-offs is once again activating increases in the fuel levy. Godongwana had put a hold on the increase in 2022 to cushion the blow of global oil prices, pending a review of the fuel payment structure. As from next month, the general fuel levy on petrol will increase by 16 cents to R4.01 per litre. The levy on diesel will go up by 15 cents to R3.85 per litre. 'For the 2025/26 fiscal year, this is the only new tax proposal that I'm announcing. This is the first fuel levy increase in three years. Cut and join with the next line. Unfortunately, this tax measure alone will not close the fiscal gap over the medium term.' With Godongwana deciding not to increase any other taxes, the pressure is now on the taxman to increase collections by at least R20 billion a year, to ward off proposed changes in other taxes in next year's budget. The proverbial sin taxes for alcohol and tobacco products remain unchanged from the increases which came into effect in March. MK PARTY CRITICISES FREEZE LIFT ON FUEL LEVY INCREASE The uMkhonto weSizwe (MK) Party has criticised raising the fuel levy, saying it's as destructive as raising VAT. The official opposition party says this reverses the positive step of scrapping the proposed hike on VAT. MK Party parliamentary leader John Hlophe says the fuel levy will ultimately affect poor and working-class people the most. 'That is going to hit hard, the very poor people to begin with. It's going to increase the cost of living, increase the cost of production. Food is going to go up because of the fuel levy, and transport is going to affect so many of our people. It's not a pro-poor budget, it really supports the status quo; those who are rich are going to get richer.'
