Petrol price nightmare in South Africa — how much tax you pay per litre

Government add-ons to the fuel price, excluding retail and wholesale margins, have almost doubled since the 2014/15 financial year, and they currently make up approximately 32% of the price South Africans pay per litre of fuel.

During his 2024 Budget Speech, Finance Minister Enoch Godongwana announced that government would hold off on increasing the Road Accident Fund (RAF) and general fuel levies added onto the basic fuel price (BFP) in South Africa for another year.

This is the fourth year in a row that the RAF levy has sat at R2.18 per litre.

“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,” Godongwana said.

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

According to Wayne Duvenage, CEO of the Organisation Undoing Tax Abuse (Outa), South Africa’s fuel prices are made up of the following components:

• BFP —  the cost of the petrol before any money is spent on the many other taxes and levies applied.
• “Other levies” — these comprise transport, secondary storage, distribution costs, and one or two smaller charges.
• Wholesale and retail margins — the markup wholesalers and retailers are allowed to add.
• Fuel levy — the tax on each litre of fuel sold.
• RAF levy — levy placed on fuel to fund the RAF.

While government has kept the RAF levy steady since the 2021/22 financial year, the same cannot be said for the General Fuel Levy (GFL).

According to data from Outa, South Africa’s government increased the GFL from R3.42 in 2022/23 to R3.86 in 2023/24.

It will remain at R3.86 throughout the 2024/25 financial year.

Outa provided MyBroadband with historical fuel price and tax data for the past ten years, and it shows that add-ons like the RAF levy, GFL, and other levies combined have almost doubled since the 2014/15 financial year.

Combined, the add-ons grew from R4.09 in 2014/15 to R7.52 in the 2023/24 financial year. This excludes the retail and wholesale margins.

With these included, the fuel price add-ons totalled R10.67 in the 2023/24 financial year. At the time, the BFP averaged R12.72, meaning fuel add-ons comprised approximately 45% of the price per litre in 2023/24.

The BFP has also increased significantly over the ten years, from R7.25 in 2014/15 to R12.72 in 2023/24. However, it should be noted that it was down in 2023/24 from its peak of R12.88 per litre in 2022/23.

The chart below shows how margins and taxes have inflated the South African fuel price over the years. It compares South Africa’s fuel add-ons to the BFP over the years. Retail and wholesale margins are excluded.

Despite a slight reduction in the fuel levy in 2022/23, the tax increased by approximately 72% between the 2014/25 and 2023/24 financial years.

The “other levies” portion of the add-ons, which include transport, secondary storage, and distribution costs, has also increased substantially over the past ten years, from R0.80 in 2014/15 to R1.48 in 2023/24.

The RAF levy has seen the highest relative increase. It sat at R1.04 during the 2014/15 financial year and currently sits at R2.18 per litre.

However, it has remained at R2.18 since the 2021/22 financial year. South Africa’s government has paused RAF levy increases for the past few years to provide motorists some relief at the pumps.

This means that the add-on grew by approximately 109% over eight years. However, if you were to track the RAF levy back further, it sat at R0.47 in the 2008/09 financial year, meaning it has more than tripled over the past fourteen years.

Bad start to 2024

Despite its efforts to mitigate the impact of fuel prices on South African motorists, several aspects are out of the government’s control.

South Africa started 2024 with a hefty fuel price hike in February. Another significant increase is anticipated for March.

The Automobile Association of South Africa’s (AA’s) Layton Beard recently told MyBroadband that the Houthi attacks on fuel cargo ships and the weakened rand were primarily to blame for the increase in February.

“The impact of the geopolitical risks and the attacks on oil cargo ships in that Red Sea stretch through the Suez is causing an increase in the Brent Crude oil price,” said Beard.

“When you consider that we buy international oil and every barrel has gone up by $5, that’s a lot of money because we’re talking about billions and billions of barrels.”

“Then you got to look at other factors. It’s been very cold in Europe and the US, and their stockpiles have been affected, which has also pushed oil prices higher,” he added.

Beard also said the rand hadn’t weakened much, but enough for it to impact the price of fuel in South Africa.

“If your buying power has diminished and the cost of the product you are buying has become more expensive, that’s going to lead to what they call an under-recovery, and therefore, you’re going to pay more at the pump,” he said.