The Road Freight Association (RFA) has warned that the increase in the general fuel levy will have far-reaching consequences, starting with consumers.
The third iteration of the 2025 budget review, tabled on Wednesday, did away with the proposed controversial VAT hike partly by introducing the first increase in the fuel levy in three years.
From June 4, the general fuel levy will increase by 16c per litre for petrol and by 15c per litre for diesel.
In a statement on Thursday, the RFA said the increase would be directly felt by consumers, raising the cost of transport and constraining the country’s logistics sector, 85% of which runs by road freight.
“This will be directly felt by consumers as transporters cannot absorb increases without detrimental effects on their bottom line,” it said.
“The consumer will pay more, transport through SA will become more expensive, global supply chains will re-evaluate their routes and you and I will dig deeper into our pockets for goods and services and transport to work.”
The Automobile Association (AA) raised concerns that lower-income households, who tend to spend the largest share of their income on transport, will be hit hardest.
In a statement issued on Thursday the AA said the levy increase comes at a time when unemployment, high food prices, elevated interest rates and rising electricity tariffs are already putting strain on SA consumers.
“Fuel is a critical input cost across all sectors of the economy; any increase inevitably drives up transport and operational costs, further intensifying inflation,” it added.
“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.”
The organisation called for a “comprehensive and transparent review” of SA’s fuel pricing model, including a forensic audit of revenue generated from the general fuel levy and how it is allocated and spent.
RFA CEO Gavin Kelly said the increase “is not a good decision, neither in the medium nor long term.”
“The adage that government can keep increasing taxes and levies to fund its uncontrolled spending remains true. Government does not have money — it belongs to the taxpayers and the time for accountability and responsibility has come,” he said.
The budget overview notes that the general fuel levy has remained unchanged for the past three years to provide consumers with relief from high fuel price inflation.
The Treasury said the increase is in line with inflation and will help to ease the main budget deficit, which now stands at 4.5% of GDP.
Still, finance minister Enoch Godongwana warned that tax measures alone would not close the fiscal gap over the medium term, and he has pencilled in a further R20bn of tax hikes for next year’s budget.
The SA Revenue Service (Sars) was also allocated an additional R7.5bn in the medium-term expenditure framework to increase the effectiveness of revenue collection.
Sars indicated that the added funding could raise between R20bn and R50bn in additional revenue by enabling it to increase collections from debts owed to the fiscus.
Despite these measures, the reversal of the VAT increase and the downward revision of SA’s economic outlook means tax revenue projections have now been reduced by R61.9bn over the next three years compared to March estimates.
“In this difficult environment, it remains vital that we still take actions to increase revenue to protect and bolster front-line services, while expanding infrastructure investments to drive economic activity,” Godongwana said.
The RFA was unsympathetic to those concerns though, saying the fuel levy hike “underscores that the Treasury would rather tax citizens than cut the wasteful expenditure that has brought the country to where it is”.
Business Day reported that fuel prices could still drop in June, thanks to a stronger rand and weaker dollar-based oil prices.
According to the latest data from the Central Energy Fund, the wholesale diesel price could fall as much as 50c/l in June, while petrol could ease as much as 23c/l.
However, the SA Petroleum Retailers Association (Sapra), said “should there be a decrease come June 4, it will be minimal due to the proposed increase on the general fuel levy”.
“Should the budget be approved, this will be a blow to SA consumers and businesses,” said Sapra national vice-chairperson Lebo Ramolahloane.
“The levy increase adds to inflationary pressures in our already fragile economy, where growth forecasts aren’t looking promising and are also dependent on the outcomes from trade talks that will take place between SA and the US.”
Update: May 22 2025
This story contains comment from AA and the SA Petroleum Retailers Association
With Denis Droppa
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