Fuel tax hike warning for South Africa

 ·1 Feb 2024

Experts are divided on whether or not South African motorists will soon have to pay more tax on fuel.

On 21 February, Finance Minister Enoch Godongwana will announce the state’s budget as it struggles to balance its finances.

In the Medium-Term Budget Policy Statement, Godongwana said that South Africa’s main budget deficit increased by R54.7 billion compared to 2023 Budget estimates. “We are now projecting a deficit of 4.9% of GDP compared to our previous estimate of 4.0%,” he said.

“Under these circumstances, measures to stabilise public finances and reform the economy to generate higher growth are essential.”

The minister added that the National Treasury will look to raise R15 billion in additional taxes in 2024 as the country looks for avenues to increase revenue.

However, speaking in a pre-budget roundtable for the 2024 budget, Deloitte’s Billy Joubert said that the minister is unlikely to raise tax rates, with the R15 billion only making up a small percentage of the total tax collected.

During the 2023/23 financial year, the South African Revenue Service collected a total gross of R2,067.8 billion, with a total net collection of R1,686.7 billion after R381.1 billion in refunds.

Responding to a question from BusinessTech, Joubert noted that it is unlikely that there will be an increase in the General Fuel Levy and Road Accident Fund Levy in the 2024 budget.

This means that the General Fuel Levy will likely remain at R3.95 – currently 18% of the retail price – while the Road Accident Fund should stay at R2.18, roughly 10% of the current price. 

Joubert said that the cost of living crisis will probably deter the National Treasury from increasing these levies, as the government would want to keep money directly in the pockets of consumers.

In the event that there is an increase, however, he said that it would be minimal.

A hold on fuel taxes in 2024 is not the consensus among analysts, though, with experts at Sage believing there will be a fuel tax hike in the budget.

“For the past two years, the government has maintained the fuel levy at a consistent level to support individuals and businesses grappling with higher petrol and diesel prices. However, this year, we will likely see an increase in line with inflation,” Sage said.

The latest consumer price inflation (CPI) data showed a decrease from 5.5% in November to 5.1% in December, with inflation averaging 6.0% in 2023.

Should a CPI-based hike come through, motorists could expect to be paying in the region of 27 to 37 cents per litre more in taxes come April.

Read: Eskom flags big problems with South Africa’s new electricity pricing rules

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