The Automobile Association (AA) notes the announcement by the Minister of Finance to increase the General Fuel Levy (GFL) by 16 cents per litre for petrol and 15 cents per litre for diesel, effective 4 June 2025. The Minister described this adjustment—the first in three years—as the sole new tax proposal for the 2025/26 fiscal year, citing inflationary pressures as the reason for the hike.
While acknowledging the government’s fiscal constraints, the AA warns that this increase will have immediate and far-reaching consequences for consumers and the economy.
Cost-of-Living Concerns
This levy adjustment comes at a time when South Africans are already contending with high food prices, elevated interest rates, increased electricity tariffs and persistently high unemployment. Fuel is a critical input cost across all sectors of the economy; any increase inevitably drives up transport and operational costs, further intensifying inflation.
Lower-income households, which spend a greater share of their income on transport, will be disproportionately affected by this rise.
Escalating Tax Burden on Fuel
With the new adjustments in June, the combined cost of the GFL and the Road Accident Fund (RAF) Levy will exceed R6.00 per litre in some areas—accounting for more than 30% of the total pump price before adding the base fuel cost, distribution margins, and retail mark-ups.
While the AA recognises the need to address fiscal pressures, continuously turning to fuel levies to fill budget gaps is unsustainable—especially in the absence of transparency on how these funds are allocated and used.
Call for Reform and Transparency
In light of this development, the AA renews its call for a comprehensive and transparent review of South Africa’s fuel pricing model. This should include:
- A forensic audit of revenue generated from the GFL and RAF Levy, including its allocation and expenditure
- Full transparency on the fuel price-setting formula published by the Department of Mineral Resources and Energy (DMRE)
- Engagement with civil society, labour, and the transport sector to identify fair and sustainable revenue models
- Exploration of alternative funding mechanisms that reduce reliance on fuel-based taxation.
A Broader Conversation is Needed
Although the latest increase may appear modest in isolation, it forms part of a broader trend where motorists and transport-reliant industries bear the brunt of fiscal policy changes. South Africa must have a broader conversation about funding infrastructure, road safety, and public transport in a way that doesn’t unduly burden citizens.
The AA stands ready to engage with government and all stakeholders to develop sustainable, transparent, and equitable solutions that support both economic growth and the citizens who drive it.
