Minister of Finance Enoch Godongwana has increased fuel levy to make up for the lost revenue following the withdrawal of the value-added tax (VAT).
This is his third attempt at making the budget work for the South African economy, after the last two attempts collapsed due to opposition to the VAT increase.
Godongwana said petrol will increase by 16c to R4.01 per litre, while diesel increased by 15c to R3.85 per litre, effective June 4.
“The general fuel levy has remained unchanged for the past three years to provide consumers with relief from high fuel price inflation.
“To replace a portion of the lost revenue from the withdrawal of the VAT rate increases, the government proposes an inflationary increase in the general fuel levy for petrol and diesel,” said Godongwana.
He explained that the main policy changes in this third attempt at presenting the national budget are the withdrawal of the VAT increases and the withdrawal of additional zero-rated items.
He said R20 billion in additional revenue is included in the 2026/27 fiscal framework to account for the revenue shortfall and that the 2026 budget will look into ways that this amount can be raised.
“Tax revenue is expected to rise from R1.86 trillion in 2024/25 to R2.29 trillion in 2027/28. Compared with estimates presented in March, medium-term tax revenue projections have been revised down by R61.9 billion due to the reversal of the VAT rate increase and the updated economic forecast.
“Tax policy measures proposed in this Budget Overview will raise an additional R18 billion in 2025/26, and an additional R20 billion in tax measures will be proposed in the 2026 budget,” said Godongwana.
Godongwana said it is expected that the gross tax revenue will rise from R1.86 trillion in 2024/25 to R2.29 trillion in 2027/28.
He emphasised that the government wanted to fulfil its objectives of broadening the tax base and improving the efficiency and effectiveness of SARS for sustainable revenue collection.
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