Good news for motorists – no petrol tax hikes
Finance minister Enoch Godongwana announced that National Treasury will provide some relief for motorists by freezing the fuel levy and Road Accident Fund levy for 2022.
In his budget speech delivered on Wednesday (23 February), Godongwana said that inland prices for fuel have breached R20 per litre, putting extreme pressure on the cost of transport, food and other goods and services.
“To provide some relief to households, no increases will be made to the general fuel levy on petrol and diesel for 2022/23. This will provide tax relief of R3.5 billion to South Africans,” he said. “There will also be no increase in the Road Accident Fund levy.”
The General Fuel Levy is currently pegged at R3.93 per litre and the RAF levy at R2.18 per litres. Combined they add R6.11 to every litre of petrol and diesel sold in the country.
On top of the slight reprieve, Godongwana said that his department is also working with the Department of Mineral Resources and Energy on doing a full review of the petrol price structure.
“Our teams have already begun to engage on this critical work,” he said.
The minister’s announcement will come as relief to motorists who have had to bear the brunt of massive price hikes over the last few months. While 2022 kicked off with a drop in petrol prices, this came off significant hikes in December 2021.
This was also completely undone by price hikes in February. Mid-month estimations from the Central Energy Fund pointed to a massive hike in prices of around R1.20 per litre coming in March.
A complete review of how the petrol price is structured is one of four interventions on rising fuel prices proposed by the energy department in December.
Parliament’s Portfolio Committee on Mineral Resources and Energy held a series of meetings in April 2021 to discuss South Africa’s basic fuel price.
The committee subsequently advised the Department of Mineral Resources and Energy to review the basic fuel price, including alternatives on the taxation aspect.
Presenting to parliament, the Automobile Association of South Africa (AA) also called for a total review of how the country’s petrol price is calculated as a matter of urgency.
Among the key recommendations made by the AA to the Portfolio Committee on measures to mitigate rising fuel costs were:
- An investigation of current pricing model;
- Recalculation and audit of existing elements within the pricing model;
- Reduction of the cost of the Road Accident Fund (RAF) to motorists through measures such as better management, improved road safety and better policing;
- Better allocation and utilisation of funds from the General Fuel Levy (GFL);
- Investment in alternatives to the country’s current reliance on fuel.
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