For every R100 motorists spend on petrol, R27 is tax

Government taxes make up 27% of the petrol price charged at the pump and just over 28% of the price of diesel, contributing significantly to the overall fuel price in South Africa.

The Finance Minister revealed this in the Full Budget Review following his speech outlining the government’s spending plans for the next financial year.

In his speech, he offered some relief to motorists by not increasing the general fuel levy nor the Road Accident Fund (RAF) levy for the 2024/25 financial year.

This will result in tax relief of around R4 billion to South African motorists, who have been hard hit by fuel price increases over the last year.

The latest announcement was a surprise. There were no fuel levy increases in the last two budgets, and many economists predicted it would change this year.

However, this does not take away the fact that a substantial part of the price South Africans are paying for petrol and diesel is due to these taxes imposed by the government.

Starting in March, taxes will make up 26.8% of the petrol price and 28.1% of the diesel price in the next financial year.

Taxes will contribute over R6 of the total price of fuel per litre that South Africans will pay at the pump.

The basic fuel price is the largest component at 53% to 55%. According to the AA, this equates to roughly R12.78 per litre, depending on the grade of petrol or diesel.

Wholesale and retail margins make up roughly 15% of the fuel price, costing R3.49 per litre. This is influenced by the costs of transporting fuel within South Africa, storing it, and pumping it.

The general fuel levy is the fourth largest revenue item in the government’s budget and has become an increasingly important source of revenue in the last decade. It contributes around R90 billion in tax revenue.

Around 17% of the fuel price is due to the general fuel levy alone, which equates to R3.96 per litre.

This levy goes directly to the National Treasury and can be used for any purpose the government considers fit.

The RAF levy, on the other hand, costs motorists R2.18 per litre of petrol and is used to fund the RAF. This funding is expected to total R48 billion in the current financial year.

The table below shows how much various levies contribute to the overall price of fuel in the country.

On top of the general fuel levy and the RAF levy, the government collects customs and excise levies on fuel and has recently imposed a carbon tax on petrol and diesel sales.

This article was first published by Daily Investor and is reproduced with permission.

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For every R100 motorists spend on petrol, R27 is tax