Finance minister Tito Mboweni announced an increase in fuel levies for South African motorists during his Budget 2020 speech.
In his speech, the minister stated that the general fuel levy would be increased by 25 cents per litre – 16 cents of which is for the general fuel levy and 9 cents of which is for the Road Accident Fund levy.
These levy increases and the subsequent increase in petrol prices will take effect from 1 April 2020.
“To adjust for inflation, the fuel levy goes up by 25 cents per litre, of which 16 cents is for the general fuel levy and 9 cents is for the Road Accident Fund levy,” Mboweni said.
Despite this increase, Mboweni said the liabilities of the RAF are forecast to exceed R600 billion by 2022/23.
By comparison, Eskom is currently the biggest liability to South Africa’s economy as of October 2019, with an estimated debt liability of R450 billion.
“We need to take urgent steps to reduce this risk to the fiscus and bring about a more equitable way of sharing these costs,” he said. “One option is to introduce compulsory third-party insurance.”
Levies already high
The Automobile Association (AA) implored Mboweni earlier this week not to increase fuel levies, arguing that it would be damaging to the economy.
“Seen against the background of government spending, a bloated civil service, looming increases to electricity rates, bailouts of state-owned entities to the tune of billions of rands, and minimal or no increases to salaries and wages over the same period, any increase to the fuel levies now is ill-advised and counter-productive,” said the AA.
“Given the fact that many South Africans are buckling under severe financial constraints, such an increase this year will be more than detrimental; it could be catastrophic.”
The AA said the two major motoring taxes already comprised 40% of the fuel price in South Africa before the increase announced today.
“While a slight increase, even one in line with inflation, may not seem drastic, it has an enormous impact on the lives of consumers who rely on every cent to make it to the end of each month.”