Petrol price shock for South Africa

Finance Minister Enoch Godongwana has given South African motorists a break. The revised 2025 budget sticks to his original plan to prevent fuel levy hikes.

Presenting the revised 2025 budget on Wednesday (12 March), the minister said that the general fuel levy will remain frozen for another year.

The Road Accident Fund (RAF) levy and the customs and excise levy will also remain unchanged.

Economists widely expected that the Treasury would use this ‘easy tax’ to cover the revenue shortfall created by axing a two-percentage-point VAT hike.

However, counter to these expectations, the minister has held firm on his plan to keep the fuel levy unchanged to prevent big petrol price increases.

According to Godongwana, freezing the GFL and RAF levy for another year will provide around R4 billion in tax relief to motorists and help soften the blow of the proposed VAT hike.

While VAT will no longer jump by two percentage points, the National Treasury still proposed a one percentage point increase over two years. This would see VAT increase to 15.5% in 2025 and to 16% in 2026.

To reduce the impact on taxpayers, Godongwana expanded the basket of zero-rated goods and frozen fuel levies. Fuel levies have been frozen since April 2022.

However, this does not mean all fuel taxes have been frozen. Motorists will still be paying more taxes for fuel from April, with the carbon fuel levy going up by 3cpl.

“The carbon tax plays an integral role in South Africa’s climate change mitigation efforts. It increased from R190 to R236 per tonne of carbon dioxide equivalent from 1 January 2025,” Treasury said.

From 2 April 2025, the carbon fuel levy will increase by 3cpl from 11cpl to 14cpl for petrol and from 14cpl to 17cpl for diesel, as required under the Carbon Tax Act (2019).

Even with the hiked carbon tax, though, motorists can look forward to some relief at the pumps in April.

The latest data from the Central Energy Fund (CEF) shows both petrol and diesel prices with over-recoveries that won’t be undone by the hikes.

Petrol is currently showing an over-recovery of between 85 and 98 cents per litre, while diesel is at around 87 cents per litre.

Factoring in the carbon tax hikes—and if current market conditions hold—this would translate to a petrol and diesel price cut of around 82cpl and 95cpl for petrol and 84cpl for diesel.

This article has been updated to reflect the correct increase in the carbon fuel levy.