Treasury announces big fuel, alcohol, and tobacco tax increases for South Africa

Finance Minister Enoch Godongwana announced a slew of tax increases during his 2024 Budget Speech, including higher carbon fuel levies and taxes on products like cigarettes and vapes.

He also announced support for electric vehicle manufacturers, where producers can claim 150% of qualifying investment spending on electric and hydrogen-powered vehicles from March 2026.

Regarding fuel add-ons, the National Treasury revealed that there will be no road accident fund (RAF) levy increase again in the 2024/25 financial year.

South African motorists will also see no change to the general fuel levy in the upcoming financial year.

“As in the 2022 and 2023 Budgets, government again proposes no changes to the general fuel levy or the Road Accident Fund levy, resulting in tax relief of around R4 billion,” National Treasury said in its 2024 Budget Review document.

“We are mindful of the already high cost of living and the impact fuel prices have on food and transport costs,” Godongwana added.

However, motorists will see some fuel carbon tax increases — R0.11 per litre for petrol and R0.14 per litre for diesel taking effect from 3 April 2024.

“A discussion paper outlining proposals for the second phase of the carbon tax will be published for public comment later in the year,” the minister said.

Godongwana announced several price hikes for “sin taxes”, which include products containing alcohol and tobacco.

He noted that the proposed increases for alcoholic products are above inflation at 6.7% to 7.2%.

This will see the tax charged on a can of beer, cider, and alcoholic fruit beverages increase by R0.14, while a bottle of wine will cost an extra R0.28.

Other alcohol-related sin tax increases are as follows:

• A bottle of fortified wine will increase by R0.47;
• A bottle of sparkling wine will cost an extra R0.89; and,
• A bottle of spirits, including whisk(e)y, gin, or vodka, will increase by R5.53.

“We also propose to increase tobacco excise duties by 4.7 per cent for cigarettes and cigarette tobacco, and by 8.2 per cent for pipe tobacco and cigars,” said Godongwana.

This translates to a R9.51 increase for cigars, R0.97 for cigarettes, and R0.57 for pipe tobacco.

The National Treasury set its sights on vape products again, proposing an increase from R2.90 to R3.04 per millilitre.

Vaping devices are defined as “electronic nicotine and non-nicotine delivery systems”, meaning even those not containing any nicotine will suffer the same increase.

Support for EV manufacturers — in two years

Godongwana announced that starting 1 March 2026, the government will introduce an investment allowance for new investments to encourage the local production of electric vehicles.

“This will allow producers to claim 150% of qualifying investment spending on electric and hydrogen-powered vehicles in the first year,” the minister said.

“The incentive will be implemented in addition to the existing support under the Automotive Production Development Programme.”

He added that National Treasury has also reprioritised R964 million over the medium turn to support the country’s transition to electric vehicles.

Godongwana referenced the Electric Vehicles White Paper, published in December 2023, saying it outlines government’s strategy to shift to “broader new energy vehicle production and consumption in the country”.

“It aims to transition the automotive industry from primarily producing internal combustion engine vehicles to a dual platform that includes electric vehicles, by 2035,” the minister added.