Fuel Tax Warning and Projected Fuel Prices for March 2025
Experts at Deloitte believe fuel taxes will increase, adding another potential price pressure for cash-strapped South Africans plus minor price hikes for March 2025….so far.
Responding to questions from local media outlets, Momohlwa Mohlola, an Associate Director from Deloitte’s Corporate Tax Sector, predicted that fuel levies could be increased at the 2025 Budget Speech.
The General Fuel Levy currently amounts to 18% of the retail price, while the Road Accident Fund (RAF) Levy is about 10%.
Finance Minister Enoch Godongwana kept the levies flat in the 2024 Budget. The Minister noted that the government had to be mindful of the high cost of living and the impact that fuel has on food and transport costs. He stated that this tax relief would put around R4 billion in the pocket of consumers.
On top of the expected increase in the levy, Deloitte’s experts said that the carbon fuel levy will increase during the 2025 Budget.
The carbon fuel levy is included as an add-on to the general fuel levy. In the 2024 Budget, the carbon fuel levy increased to 11 cents per litre for petrol and 14 cents per litre for diesel.
With the latest fuel increase, the fuel levy contributes R3.96 per litre, while the RAF levy adds R2.18 per litre of 95 petrol.This means that R6.14 is paid in taxes for every R22.41 spent on each litre of 95 petrol.
The latest tax increase will likely cause more pain for households and businesses who were dealt another increase in fuel in February.
The Department of Petroleum and Mineral Resources said that January saw both the global price of petrol increase and the rand come in weaker relative to December.
This led to a price hike at the pumps, marking the fourth straight month of increases and the second increase for 2025.
March fuel prices: Predicted changes for petrol and diesel…so far
- Petrol 93: Increase of 26 cents per litre
- Petrol 95: Increase of 13 cents per litre
- Diesel 0.05% (wholesale): Increase of 8 cents per litre
- Diesel 0.005% (wholesale): Increase of 0 cents per litre
- Illuminating paraffin: Increase of 20 cents per litre
Crucial factors: Rand/dollar, oil prices
Fuel prices are primarily determined by the price of oil and the rand/dollar exchange rate.
The more positive direction for pricing compared to the start of the month can be largely attributed to the rand/dollar exchange holding steady.
At the time of writing on Friday, 17 February, the rand was trading at R18.27 to the US dollar.
The rand’s largely unchanged position against the American greenback comes as somewhat of a surprise, as South Africa has been on the receiving end of the flurry of executive orders signed by US President Donald Trump this week.
The rand is currently contributing to an 8 to 9 cents per litre over-recovery in the pricing.
Oil prices, meanwhile, are keeping recoveries subdued, accounting for the 9 to 34 cents per litre under-recovery in pricing, depending on fuel type and grade.
