Fuel levy hike to hit poor households the most
The General Fuel Tax levy, according to Finance Minister Enoch Gondongwana, is the sole new tax proposal for the 2025/26 fiscal year
Image: REUTERS/Ian Hodgson
The Automobile Association (AA) has raised concern over Minister of Finance Enoch Gondongwana'a announcement of the General Fuel Levy (GFL) increase. Presenting his Budget speech on Wednesday, Gondongwana proposed an increase of 16 cents per litre for petrol and 15 cents per litre for diesel, which will come into effect on June 4.
The Minister described this adjustment—the first in three years—as the sole new tax proposal for the 2025/26 fiscal year, citing inflationary pressures as the reason for the hike.
Eleanor Mavimbela, the AA Public Affairs spokesperson, while acknowledging the government’s fiscal constraints, warned that the increase will have immediate and far-reaching consequences for consumers and the economy.
"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. Lower-income households, which spend a greater share of their income on transport, will be disproportionately affected by this rise," said said.
Escalating Tax Burden on Fuel
With the new adjustments in June, the combined cost of the GFL and the Road Accident Fund (RAF) Levy will exceed R6.00 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 mark-ups.
"While the AA recognises the need to address fiscal pressures, continuously turning to fuel levies to fill budget gaps is unsustainable—especially in the absence of transparency on how these funds are allocated and used," said Mavimbela.
Call for Reform and Transparency
In light of this development, the AA renewed its call for a comprehensive and transparent review of South Africa’s fuel pricing model. This should include:
- A forensic audit of revenue generated from the GFL and RAF Levy, including its allocation and expenditure
- Full transparency on the fuel price-setting formula published by the Department of Mineral Resources and Energy (DMRE)
- Engagement with civil society, labour, and the transport sector to identify fair and sustainable revenue models
- Exploration of alternative funding mechanisms that reduce reliance on fuel-based taxation.
A Broader Conversation is Needed
Although the latest increase may appear modest in isolation, it forms part of a broader trend where motorists and transport-reliant industries bear the brunt of fiscal policy changes. South Africa must have a broader conversation about funding infrastructure, road safety, and public transport in a way that doesn’t unduly burden citizens, she said.
The AA stands ready to engage with the government and all stakeholders to develop sustainable, transparent, and equitable solutions that support both economic growth and the citizens who drive it, said Mavimbela.