National Treasury defends decision to increase fuel levy

The National Treasury has defended the decision to increase the fuel levy in the 2025/26 national Budget. Finance Minister Enoch Godongwana announced a general fuel levy increase of 15 cents diesel and 16 cents per litre of petrol when he tabled the Budget on Wednesday in Parliament.

Deputy Director General on Tax and Financial Policy in the National Treasury, Chris Axelson, says the increase on fuel levy was last done in 2021.

He acknowledged that it was not an easy decision to adjust the levy, but it was a correct step.

“On fuel levy, this has not been adjusted since the 7 of April 2021. The current increase is in line with the expected inflation of around 4%. In our view, this is not the replacement of the VAT increase. The VAT increase was anticipated to raise R75 billion over the next three years. This figure of 4% increase in the fuel levy will increase the amount of revenue compared to the 12 March Budget of around R12 billion for the three years. So, it’s much smaller amount. There were lots of comments about the retrogressively of the tax and the fact that it does apply to everyone and consumers will feel it. A lot of those points were valid. It’s a difficult tax. We have been trying to avoid it,” explains Axelson.