Bad news about the general fuel levy in South Africa
Despite recent fuel price cuts in 2026 so far, major accounting firm PwC has advised the Finance Minister to increase the fuel and RAF levies for a revenue bump.
In its Budget Predictions 2026 report, PwC warned that both the general fuel levy and the Road Accident Fund (RAF) levy are likely candidates for increases.
The firm explained that, prior to the inflationary increase in 2025, the general fuel levy had not been adjusted since 2021 due to high fuel prices.
“Therefore, it is expected that the National Treasury will once again propose an inflationary increase in the general fuel levy in Budget 2026,” the firm said.
The RAF levy could also rise after several years of restraint. “The RAF levy was not increased in the last three years in order to support households and the economy.”
In light of fuel prices currently sitting at four-year lows, the government may take the opportunity to increase the RAF levy in line with inflation.
“This would be done to ease the burden on the RAF, which is running at a deficit on an annual basis and is technically insolvent,” the report said.
Fuel taxes have become a major component of what South Africans pay at the pump. As of February, the general fuel levy currently adds R4.01 per litre, and the RAF levy another R2.18 per litre.
Together, they account for more than R6 per litre in taxes alone. If all taxes and levies were removed, petrol and diesel would cost less than R14 per litre.
The retail fuel price is made up of two main parts. These are the Basic Fuel Price (BFP) and government taxes and levies.
The BFP reflects international oil prices and the rand-dollar exchange rate, which determine the cost of importing fuel into South Africa.
Empty promises
While motorists often blame oil markets for rising prices, the numbers tell a different story. Over the past five years, global oil prices rose by only 13.6% and the rand weakened by 9.75% against the dollar.
These increases do not fully explain the sharp rise in pump prices. Instead, repeated tax adjustments have played a major role.
Following the latest 2025 changes, motorists pay about R6.37 in tax per litre of 93 petrol and R6.24 per litre of diesel.
The fuel levy system has long been criticised as a convenient and lucrative revenue stream for the state, reducing the incentive to lower it even when households are under financial pressure.
The general fuel levy alone raises roughly R100 billion annually, placing it among the government’s largest sources of income alongside VAT and income taxes.
These concerns have prompted calls for a structural overhaul of how fuel prices are calculated.
Mineral Resources and Energy Minister Gwede Mantashe previously acknowledged the distortion caused by levies when speaking at the African Oil Week Conference in Cape Town in 2024.
“In the fuel price, there is the general fuel levy, and there is the Road Accident Fund, linked to the price of fuel. So, instead of buying a litre of fuel for R14, you buy it for R20,” he said.
“Our argument is that you are distorting the price of fuel. Let’s find the formula for separating these two things and make the price of fuel visible.”
He added that the government intended to conclude the discussion “in the shortest possible time.”
President Cyril Ramaphosa shared similar comments in his opening address to Parliament in July 2024, saying administrative prices—including the fuel price formula—would undergo a comprehensive review.
Despite those promises, the immediate outlook points in the opposite direction. With fiscal pressure mounting and fuel prices currently relatively low, the upcoming budget may deliver another increase.
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