Petrol tax increase proposed for South Africa

Finance Minister Enoch Godongwana has proposed an inflation-linked increase to South Africa’s general fuel levy (GFL), effective from 4 June 2025.

Presenting his proposed budget for the third time in 2025, Godongwana said the increase would amount to 16 cents per litre for petrol and 15 cents per litre for diesel.

This would push the GFL on petrol from R3.96 to R4.12 per litre, while motorists with diesel-powered vehicles will pay R3.97 per litre towards the levy.

The change means around 20% of the money motorists spend refilling their cars with unleaded 95 inland will go towards the GFL.

The adjustment for diesel will mean that the GFL makes up around 21% of the inland price per litre of 50ppm diesel, based on May 2025’s fuel pricing.

“This budget proposes an inflation-linked increase to the general fuel levy. For the 2025/26 fiscal year, this is the only new tax proposal I am announcing,” Godongwana said.

“It means from the 4th of June this year, the general fuel levy will increase by 16 cents per litre for petrol, and by 15 cents per litre for diesel.”

However, he noted that this tax measure alone would not close the fiscal gap over the medium term.

It should be noted that Godongwana proposed no GFL increase when he presented his budget speech in February 2025 and again in March 2025.

The change comes after Godongwana faced severe backlash for a proposed increase to South Africa’s value-added tax (VAT) percentage.

The proposed VAT hike has now been scrapped, leaving a significant fiscal gap over the medium term, requiring the government to generate these funds elsewhere.

South Africa’s GFL has remained consistent for the past four years, with Godongwana freezing the levy in 2021, 2022, 2023, and 2024.

Godongwana even decreased the levy by R1.50, from R3.85 to R2.35 for the first three months of the 2022/23 financial year, and then again by R0.75 from R3.86 to R3.11 in July 2022.

These reductions were announced to provide South African motorists with short-term relief from high fuel prices in the country.

Fuel tax hikes “unjustifiable”

In late February 2025, the Organisation Undoing Tax Abuse (Outa) said any proposals to hike the Road Accident Fund (RAF) levy or GFL would be unjustifiable.

MyBroadband asked the civil action organisation about the sustainability of keeping the two levies frozen for another year after a Budget Speech tax guide revealed Godongwana’s plan to keep the taxes as-is.

Outa said keeping the GFL and RAF levy constant would be sustainable if the government eliminated unnecessary spending and reduced fruitless and wasteful expenditures.

“Historically, these levies have been easy to collect and, unfortunately, prone to misuse,” said Stefanie Fick, Outa accountability division executive director.

“The GFL, for example, has never been ring-fenced for transport-related purposes, raising concerns about its allocation.”

According to Outa, the government curbing wasteful expenditure and restoring financial discipline would prevent unnecessary tax hikes and restore investor confidence in South Africa.

“A more stable and transparent economic environment would, in turn, encourage investment, create jobs, and stimulate business opportunities,” it said.

“Instead of relying on continuous tax increases to cover inefficiencies, the government must prioritise fiscal responsibility and structural reforms to ensure a more sustainable and prosperous future for all South Africans.”

According to Gwede Mantashe, Minister of Minerals and Petroleum Resources, South African motorists should pay around R14 per litre of fuel.

In October 2024, the minister said the GFL and RAF tax “distorts” South Africa’s fuel prices to more than R20 per litre, adding that fuel prices will continue to pressure South African motorists.

At the time, he said government was already discussing how to reduce fuel prices in the country.

“In the fuel price, there is the general fuel levy, there is the Road Accident Fund, linked to the price of fuel. So instead of buying a litre of fuel for R14, you buy it for R20,” the minister said.

“Our argument is: you are distorting the price of fuel. Let’s find the formula for separating these two things and have the price of fuel visible.”

He said the government wants to conclude the discussion in the “shortest possible time”.