fuel prices relief

In a significant move aimed at alleviating financial burdens on citizens, Finance Minister, Enoch Godongwana, declared in his budget speech on Wednesday that there will be no increases in the General Fuel Levy and Road Accident Fund (RAF) levy for the fiscal year 2024.

Cognizant of the strain already placed on households by the escalating cost of living, particularly exacerbated by soaring fuel prices impacting essentials such as food and transportation, Godongwana emphasized the government’s commitment to easing the burden.

“In this regard, we are proposing no increases to the general fuel levy for 2024/25. This will result in tax relief of around R4 billion. This is money back in the pockets of consumers,” the minister stated during his address.

The announcement signifies the retention of the General Fuel Levy at its current rate, standing at 18% of the retail price, alongside maintaining the RAF levy at approximately 10%.

Presently, for every litre of inland 95 petrol, the general fuel levy accounts for R3.95, with the RAF levy at R2.18, collectively contributing R6.13 to the price of petrol, currently valued at R23.24 per litre.

However, while the General Fuel and RAF levies remain untouched, the carbon fuel levy, an additional component incorporated into the general fuel levy, will experience a slight increase.

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The levy will rise from 10c/l to 11c/l for petrol and from 11c/l to 14c/l for diesel.

Godongwana hinted at further adjustments, stating, “A discussion paper outlining proposals for the second phase of the carbon tax will be published for public comment later in the year.”

Leading up to the budget announcement, tax experts in South Africa expressed varied opinions regarding potential fuel levy increases.

While some, like Deloitte’s Billy Joubert, anticipated a freeze, citing the prevailing cost of living crisis and the government’s inclination towards bolstering consumer spending power, others held contrasting views.

Sage and the SAIPA Centre of Tax Excellence speculated on potential adjustments, considering the government’s previous maintenance of the levy amidst volatile fuel prices.

Godongwana’s decision to forgo fuel levy increases underscores the government’s responsiveness to citizen welfare amidst economic challenges. The move not only aims to mitigate immediate financial strains but also signals a commitment to fostering economic resilience and sustainability in the long term.