Fuel Price Hike: SA Motorists Face New Burden as Levy Increases
South African motorists are set to dig deeper into their pockets as the General Fuel Levy (GFL) sees its first increase in three years, effective June 4, 2025. This adjustment, announced by the Minister of Finance, will add 16 cents per litre to petrol and 15 cents per litre to diesel, bringing new financial pressure to consumers and the broader economy.
The Automobile Association (AA) has voiced significant concerns, warning that while the government cites inflationary pressures for the hike and labels it the sole new tax proposal for the 2025/26 fiscal year, its impact will be immediate and far-reaching.
Rising Costs Hit Households Hard
As fuel is a fundamental input cost across nearly all economic sectors, this adjustment will inevitably drive up transport and operational expenses, further intensifying inflationary pressures. The AA highlights that lower-income households, who typically allocate a larger portion of their budget to transportation, will disproportionately feel the pinch of this rising fuel price.
Escalating Tax Burden on Fuel Purchases
With the impending June adjustments, the combined General Fuel Levy and Road Accident Fund (RAF) Levy will push past the R6.00 per litre mark in some regions. This means that taxes alone will account for over 30% of the total pump price, even before factoring in the base fuel cost, distribution margins, and retail mark-ups.
While acknowledging the government's fiscal challenges, the AA stresses that a continuous reliance on fuel levies to bridge budget deficits is unsustainable. This is especially true in the absence of clear transparency regarding allocating and utilising these substantial funds.
AA Calls for Urgent Fuel Pricing Model Review and Transparency
In response to this development, the AA reiterates its call for a comprehensive and transparent overhaul of South Africa's fuel pricing model. Key areas for review include:
- Forensic Audit: A detailed examination of GFL and RAF Levy revenues, including a full account of their allocation and expenditure.
- Pricing Formula Transparency: The full disclosure of the fuel price-setting formula by the Department of Mineral Resources and Energy (DMRE).
- Stakeholder Engagement: Active participation with civil society, labour organisations, and the transport sector to identify equitable and sustainable revenue generation models.
- Alternative Funding Mechanisms: Exploration of new funding approaches that reduce heavy reliance on fuel-based taxation.
