The true price of petrol in South Africa

Around R6.22 of every litre of petrol sold in South Africa consists purely of taxes that have nothing to do with the actual cost of procuring the product.

If this amount were removed from the retail price of petrol in May 2024, the inland price of unleaded 95 would drop from R24.25 to R17.85.

At current prices, South Africa’s fuel-related taxes make up around 26% of the price of petrol.

As of June 2024, the taxes in a litre of unleaded 95 petrol consisted of the following:

• General fuel levy (GFL) — R3.96
• Road Accident Fund (RAF) levy — R2.18
• Customs and excise: R0.04
• Slate levy (variable) —  R0.04
• Petroleum products levy: — 0.33 cents

The actual taxless price of fuel is made up of several elements, including the basic fuel price, costs associated with transport, storage, and distribution, and wholesale and retail margins for the businesses in the fuel supply chain.

MyBroadband calculated that South African motorists could be paying around R300 to R500 less per tank of fuel if the GFL and RAF were scrapped.

In the current financial year, these taxes contribute R6.14 to every litre of fuel. When excluded from the petrol price, the cost for a litre of unleaded 95 petrol would be R18.11.

We did not deduct the other taxes as these are negligible and serve important functions in the supply chain rather than being used to fund other government ventures.

Our determinations were based on the prices of filling up three typical fuel tanks with capacities of 45, 60, and 80 litres.

Those drivers with 45-litre tanks would pay R276.30 less per refill, whereas filling up a 60-litre or 80-litre tank would cost R368.40 and R491.20 less, respectively.

The table below compares the current prices motorists pay when filling up tanks of various sizes with how much they would pay if the GFL and RAF levy were scrapped.

While cutting taxes on South Africa’s fuel prices would bring immense relief to motorists in the short term, it would deal a heavy blow to the country’s finances.

In the 2023/2024 financial year, the GFL contributed R93.37 billion the fiscus, around 5% of government’s total tax revenue. The fuel levy is the government’s fourth-largest revenue source.

The GFL is not used just to fund transport infrastructure but helps fund expenditure on a range of other government services.

However, the RAF levy is a far more controversial item because of allegations of mismanagement.

Despite receiving R48.76 billion in revenue to compensate road users for injuries suffered in accidents on South African roads in 2022/2023, it recorded a deficit of R8.43 billion.

Research by actuary and damages expert Gregory Whittaker, conducted on behalf of the Actuarial Society of South Africa, showed that the RAF’s total deficit has exploded from around R3.8 billion in its 1994 financial year to R344.8 billion by 2022.

Whittaker determined RAF’s loss of income compensation for non-serious injuries was excessive when compared to other countries.

The number of claims falling into this category jumped from 5,957 in the 2008 financial year to 20,957 in 2023.

He estimated that the RAF could be spared around R3 billion in annual payments if widespread abuse of the system was halted by disallowing loss of income claims from individuals with minor injuries in car accidents.

The Automobile Association has argued the RAF levy could be reduced in several ways, including:

1. Better management and governance of the RAF
2. Improved road safety to reduce demand
3. Better policing
4. Safer Roads / Safer Drivers / Safer Cars / Better Post-Crash Intervention
5. Better pedestrian safety education
6. Privatisation of the RAF, or at minimum semi-privatisation of claims management

Parliament’s Portfolio Committee on Mineral Resources and Energy has also adopted a report recommending that the RAF levy be scrapped and compensation for road victims be funded through another mechanism.