Budget 3.0: Godongwana hikes fuel levy
Finance Minister Enoch Godongwana has hiked the general fuel levy to plug the hole left by the decision not to hike value-added tax.
The levy will be hiked by 16 cents per litre for petrol and 15 cents per litre for diesel.
The increase will come into effect in June.
Godongwana said the VAT rate will remain unchanged at 15%, as the National Treasury prioritises public consultation over increasing revenue.
Delivering his budget speech, Godongwana said that while raising VAT could boost fiscal resources, concerns about its impact on the poor influenced the decision to keep it unchanged.
"For the 2025/26 fiscal year, this is the only new tax proposal that I am announcing. This is the first fuel levy increase in three years.
"It means from the fourth 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. Unfortunately, this tax measure alone will not close the fiscal gap over the medium term."
The minister said the 2026 Budget will therefore need to propose new tax measures to raise R20 billion.
Godongwana allocated R7.5 billion to the South African Revenue Service (SARS) to increase the effectiveness of collecting more revenue.
Godongwana said the budget is not an austerity budget but a redistributive one.
He said the government has reduced additional spending over the medium term by R68 billion.
"This is not an austerity budget, it increases non-interest expenditure by an average of 5.4 per cent over three years. In real terms, this is 0.8 per cent growth.
"It is also a redistributive budget. It directs 61 cents of every rand of consolidated, non-interest expenditure towards the social wage."
Godongwana said in the medium term, the government will invest over R1 trillion in critical infrastructure.
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