The levy will rise by 16 cents per litre for petrol and 15 cents per litre for diesel.
For the 2025/26 fiscal year, this is the only new tax proposal that I am announcing. This is the first fuel levy increase in three years. It means from the fourth of June this year, the general fuel levy will increase by 16 cents per litre for petrol, and by 15 cents per litre for diesel.
The fuel levy hike follows government’s decision to abandon plans to raise Value Added Tax (VAT), which will remain at 15%. The reversal comes after a proposed 2% VAT increase delayed the February budget speech, with subsequent proposals suggesting staggered hikes of 0.5% in 2025 and 2026.
Godongwana told Parliament the budget continues to focus on stabilising public finances while supporting economic growth and social spending. However, the revenue shortfall left by the VAT reversal must be recovered.
I want to assure the public, and this House, that the aim of the March 12 budget was to balance the necessity of growing the economy with the equally urgent need to repair and rebuild our public finances. This remains our goal,
The Minister also confirmed that the planned expansion of the zero-rated food basket will no longer proceed. The proposal aimed to reduce the impact of the now-cancelled VAT increase on low-income households.
Items proposed for zero-rating included canned vegetables, dairy liquid blends, and organ meats from poultry, sheep, and other animals. These measures were intended to cushion vulnerable consumers from higher living costs.
Revenue Outlook Revised Down
The scrapping of the VAT hike, alongside sluggish economic performance, has led to a downward revision in tax revenue forecasts. Collections are now projected to fall short by R61.9 billion over the next three years compared to March estimates.
Godongwana warned the fuel levy increase alone would not be enough to close the fiscal gap. He said the 2026 Budget will introduce additional tax measures targeting R20 billion in revenue.
