Finance Minister chooses fuel levy hike as one way to plug Budget's VAT hole

702's John Perlman talks Budget 3.0 with political analyst Khaya Sithole.

South Africans will be coughing up more for fuel from 4 June, when the fuel levy increases.

After the reversal of the proposed value-added tax (VAT) hike, this is one of the ways Finance Minister Enoch Godongwana has chosen to plug the resulting budget shortfall.

Finally tabling the national budget for 2025/26, Godongwana also warned that further tax proposals are in the pipeline for 2026.

From next month, the general fuel levy on petrol will increase by 16 cents to R4.01 per litre.

The levy on diesel will go up by 15 cents to R3.85 per litre.

Political analyst Khaya Sithole makes the point that fuel levy inflation is in itself inflationary.

He notes that this increase is ubiquitous in the sense that it affects absolutely everybody in one way or another.

"Fuel is one of those commodities whose utilisation is ubiquitous... Whatever it is that you consume or wherever you need to travel, fuel is a component of all the costs of moving things and goods around the country so it is indeed going to hit everyone."

Khaya Sithole, Political Analyst

"However, its impacts tend to be a bit less direct than VAT because there you have to see it on your invoice. When it comes to fuel levy inflation it is really a secondary impact unless you're at the frontline of transportation services or if you are fuelling, in which case you are obviously going to see it as soon as it starts hitting."

Khaya Sithole, Political Analyst

The fuel levy increase is ultimately as bad as with any other tax, but perhaps the impact is not as direct and not as acute as VAT tends to be, Sithole reiterates.

Scroll up to the audio player to listen to the conversation