Petrol Price Relief for South Africa as Fuel Levy Freezes Amid Budget 2025

South African motorists received a welcome surprise in the 2025 national budget when Finance Minister Enoch Godongwana confirmed that fuel levy hikes would be frozen for another year. Presenting the revised budget on 12 March, Godongwana stuck to his original plan of not raising fuel levies, offering some relief to drivers amid concerns over rising living costs.

Fuel Levies and Tax Relief for Motorists

The General Fuel Levy (GFL) and Road Accident Fund (RAF) levy will remain unchanged throughout 2025, providing around R4 billion in tax relief for motorists. This decision came as a pleasant surprise, especially after expectations that the government would increase fuel taxes to cover the revenue shortfall caused by scrapping a proposed two-percentage-point VAT hike.

In Godongwana’s announcement, he mentioned that freezing the fuel levies will ease the impact of the proposed VAT increase, providing much-needed relief for cash-strapped drivers. However, it’s important to note that the carbon fuel levy will still see a significant rise.

Impact of Carbon Tax Hike

While fuel levies remain frozen, the carbon tax is on the rise. From April 2025, the carbon fuel levy will increase by 3c per litre for petrol and 17c per litre for diesel, as part of South Africa’s climate change mitigation strategy. The tax, which currently stands at R190 per tonne of CO2 equivalent, will increase to R236 per tonne in 2025.

Even with the rise in the carbon tax, motorists can still expect a reduction in fuel prices at the pumps in April. According to Central Energy Fund (CEF) data, both petrol and diesel are showing over-recoveries, which will likely result in petrol price cuts of around 71c per litre, and diesel cuts of 70c per litre.

What Does This Mean for Motorists?

Although the carbon tax increases may add some pressure, the overall relief from frozen fuel levies and the expected price cuts will provide some relief at a time when fuel costs have been a significant burden for South Africans.

Additionally, the value-added tax (VAT) is expected to rise by 1% over two years, starting with an increase to 15.5% in 2025, and 16% by 2026. To mitigate the impact on consumers, Godongwana has proposed expanding the basket of zero-rated goods, alongside the fuel levy freeze.

Looking Ahead

The freezing of fuel levies represents a crucial step in protecting South African motorists from rising costs in the face of economic challenges. With the introduction of the VAT hike, and a significant rise in the carbon fuel levy, motorists will feel a pinch at the pumps, but the combined measures in the revised 2025 budget could cushion the blow.

As always, consumers will need to stay updated on how these changes will affect their daily expenses, especially as global market conditions and domestic policies evolve.

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