A steep increase in the fuel levy is one of the measures finance minister Pravin Gordhan is most likely to use to help meet the current budget shortfall according to economists at Econometrix.
Speaking in the 21 February edition of The Star, Azar Jammine, chief economist at Econometrix, said that an increase was likely as a large amount of the required budget could theoretically be raised from the fuel levy without hiking the fuel price too much.
According to Jammine, the current forecast is that R64 billion will be raised through the fuel levy this year, and increasing the levy by only 10% would raise an additional R6.5 billion in revenue for government.
In addition, at least R13 billion would be raised if the fuel levy was increased by 20%.
“This will go a long way to raise the R28 billion extra tax revenue the government needs as mentioned in the medium-term budget policy statement.”
“It is also environmentally friendly, because it will get people to use less fuel and get people to use more fuel efficient cars, whether by switching to newer more fuel efficient cars or to small cars,” he concluded.
Gordhan will deliver his budget speech on Wednesday, 22 February 2017.
How much more you will be paying
|Increase (%)||Additional cost (cents)|
The current price for 95 Petrol inland is R13.62, while 0.05% Diesel (wholesale) is R11.63.