Tax increases to hit South African motorists from April

Finance minister, Tito Mboweni, has announced an increase in fuel levies for 2019.

In his budget speech on Wednesday (20 February), the minister said that the general fuel levy will be increased by 15 cents a litre for petrol and diesel from 3 April.

The Road Accident Fund (RAF) levy will also increase by 5 cents a litre for petrol and diesel on the same date.

As expected, the introduction of South Africa’s Carbon Tax will see an additional 9 cents per litre on petrol and 10 cents per litre on diesel added – however this change will come into effect from 5 June.

While the increases are largely in line with expectations leading up to the budget speech, further increases in the fuel levy will likely have inflationary effects and increase transportation costs.

In the 2018 medium-term budget speech it was stated that the liability of the Road Accident Fund (RAF) is expected to grow to R393 billion by 2021/2022 from R206 billion at the time of the MTBPS, and that the RAF would require further large increases to the fuel levy in each of the following three years.

As such, this year’s increases are expected to be the first of a number of annual increases in the coming years.

“The Road Accident Fund levy increase is not enough to match the Fund’s R215 billion liability,” Mboweni said.

“We urge the Department of Transport to quickly resubmit the Road Accident Benefit Scheme Bill for Parliament’s urgent consideration. It will help stabilise fuel prices.”

Mboweni also detailed how excise duties on alcohol and tobacco, and other hikes, will be implemented:

  • Excise duty on a can of beer goes up by 12 cents to R1.74
  • A 750ml bottle of wine will have an excise duty of R3.15, which is 22 cents more.
  • The duty on a 750ml bottle of sparkling wine goes up by 84 cents to R10.16.
  • The duty on a bottle of whiskey will go up by R4.54 to R65.84.
  • A pack of 20 cigarettes goes up by R1.14 to R16.66.
  • The excise duty on a typical cigar will go up by about 64 cents to R7.80.
  • No change to the excise duty on sorghum beer.
  • Fuel levies will increase by 29 cents per litre for petrol and 30 cents per litre for diesel.

Mboweni stated that white bread flour, cake flour, and sanitary pads will be zero-rated for VAT purposes from 1 April 2019.

This is what you can expect to pay at the pumps next month based on the CEF’s mid-month data.

Fuel February Official March Expected
95 Petrol R14.08 R14.51
93 Petrol R13.87 R14.30
0.05% Diesel (wholesale) R13.15 R13.75

 


Read: South Africa growth revised down to 1.5% in 2019

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Tax increases to hit South African motorists from April