Finance Minister Enoch Godongwana must carefully consider the negative impact of increasing fuel levies before he delivers his Budget Speech on Wednesday, the Automobile Association (AA) warned on Tuesday, February 20.
The two largest levies on fuel – the General Fuel Levy (GFL) and the Road Accident Fund levy (RAF) – currently comprise R6.13 on every litre of petrol and diesel sold and already generate billions of rands in revenue for the government, the AA said in a statement.
The GFL is currently R3.95/litre, while the RAF levy is R2.18/l.
Neighbouring countries who buy fuel directly from South Africa do not add these taxes making their fuels cheaper than in the country which supplies them.
“As we have noted in the past, these levies comprise a significant portion of the money spent on fuel, and many South Africans, rightfully, question how this money is allocated, and whether they receive any benefits from paying these taxes,” the AA said.
“Apart from that, the impact of increasing the levies will be felt by all because they will result in higher input costs across various sectors and will be recovered through higher prices at the till.”
In April, May, June and July 2022, the government slashed the GFL by R1.50/l amid significant fuel increases at the time.
However, the current levy rates returned in August and have remained at those rates since.
“We are concerned that the levies, left unchanged since late 2022, will now be targeted for increases,” the AA said.
“We warn, however, that raising the rates of these levies will be counter-productive and cause more financial hardships for already embattled consumers.”
“We know that consumers face rising costs of living while they either don’t have any income at all, or their salaries and wages are not adjusted because of prevailing weak economic conditions.”
The AA has for several years called for a review of the current pricing structure of fuel, particularly since fuel is so closely linked to the country’s economy.
“It believes an audit of the current fuel pricing structure is long overdue, and that the government must now act to mitigate rising fuel costs.
“South Africans are struggling, and the situation of millions of people is getting progressively worse each month, with many not able to afford basic goods.
“Rising fuel costs result in more expensive goods and services, which push people even deeper into financial hardship,” the AA said.
“While we accept that Minister Godongwana will have to walk a financial tightrope in crafting his Budget – as all his predecessors have also had to do – we call on him not to ignore the most important element in his speech, the South African public.
“Lumping the country with increased fuel taxes will not, in our view, serve any useful purpose and will, effectively, place a harsher burden on citizens,” the AA said.
Any adjustments to the fuel levies announced by Godongwana will come into effect in April.
