Fuel levies: Could they fall for permanent relief on petrol prices?

0 Fuel levies could change South African petrol prices permanently. if Mininster Godongwana can carry out his plans. Image: Pexels Home » Fuel levies: Could they fall for permanent relief on petrol prices?

Fuel levies could change South African petrol prices permanently. Here’s what motorists can expect if Godongwana carry out his plans.

0 Fuel levies could change South African petrol prices permanently. if Mininster Godongwana can carry out his plans. Image: Pexels South African motorists are waiting to hear what fuel prices will look like from Wednesday, 4 November, as Finance Minister Enoch Godongwana has announced temporary relief through lower fuel levies. 

However, his longer-term ambitions could bring even more substantial changes!

The National Treasury wants to find a way to remove these charges permanently. That would require major changes to government revenue and road accident compensation. 

But for now, motorists will have to be happy with the confirmed November reductions and hope that the minister’s longer-term plans may materialise.

Fuel levies form part of the regulated price motorists pay at the pumps. They include the general fuel levy, carbon fuel levy and Road Accident Fund (RAF) levy. Government collects these charges to fund public spending and road accident compensation.

The total levy adds R6.58 to the basic fuel price, distribution costs and other regulated components of every litre of petrol and diesel.

A reduction can therefore lower the pump price directly, provided other price components remain unchanged. Of course, global oil prices and the rand’s exchange rate can still push prices higher.

In the meantime, we can look forward to a little bit of light at the end of the tunnel. Godongwana announced temporary relief during the Medium-Term Budget Policy Statement on 21 October. From 4 November until 1 December, petrol levies will fall by R1.50 per litre. Diesel levies will drop by R3 per litre.

The relief will continue at smaller reductions until 5 January 2027. During that period, petrol levies will fall by R1 per litre, while diesel levies will fall by R1.50.

The government expects the measures to provide R10 billion in support. Treasury will fund the relief by returning money from the Central Energy Fund to the National Revenue Fund.

Godongwana has said Treasury wants to find a way to phase out fuel levies. He said that the general fuel levy generates about R80 billion annually. Removing it would therefore leave a substantial gap in government revenue.

The minister has also highlighted the need to change how the RAF funds accident compensation. The fund currently relies on a levy linked to fuel sales. A different insurance model could reduce that dependence.

The Automobile Association supports scrapping the levies and reviewing the basic fuel-price formula publicly. However, neither permanent removal nor a timetable has been confirmed.

For motorists, the November reduction offers some immediate relief. A permanent change would require Treasury to replace revenue and redesign funding arrangements. 

So, until government announces a workable plan, fuel levies will remain part of the price at the pumps.

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