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South Africans Hit by Hefty Fuel Tax Increase Impact

  • Tax Burden at the Pump: South Africans face a significant increase in fuel costs due to a combination of new fuel price hikes and ongoing tax increases. Taxes now make up a substantial portion of the retail price of petrol, with motorists paying an average of R320 in taxes every time they fill up.
  • Monthly Tax Contributions: Analysis of Discovery Bank's data reveals the monthly tax contributions of South African drivers, highlighting the financial strain faced by households. Popular car models' tax contributions per 100km traveled underscore the impact on everyday consumers.
  • Price Adjustments and Factors: The Department of Energy's latest fuel price adjustments show increases in petrol prices and decreases in diesel prices, influenced by international petroleum costs and fluctuations in the rand/dollar exchange rate. Inland and coastal price differentials further compound the financial strain on consumers.
Petrol Price Hike

As of May 1st, South Africans are bracing themselves for a heavier toll at the pumps, as new fuel price hikes coupled with ongoing tax increases come into effect. The consequence? A significant portion of what motorists pay for petrol now directly feeds into government coffers, with taxes accounting for a substantial slice of each refuel.

While there were no immediate hikes in the General Fuel Levy (GFL) or the Road Accident Fund (RAF) for 2024, marginal increases still apply. For instance, a mere 1 cent and 3 cents per litre hike to the carbon tax for petrol and diesel, respectively, adds to the financial burden felt by motorists nationwide.

Breaking down the tax structure reveals the extent of the financial burden carried by South African drivers. The Fuel Levy now stands at 396 cents per litre for petrol and 384 cents per litre for diesel, while the Road Accident Fund Levy amounts to 218 cents per litre for both fuel types. In addition, customs and excise duties, slate levies, and petroleum products levies further augment the cost.

From May 1st, a staggering R6.40 per litre of petrol purchased translates into taxes or levies, constituting approximately 25.1% of the retail price. For the average motorist filling a 50-litre tank with 95-octane fuel, this equates to shelling out R1,274.50, with R320 allocated towards various taxes with each refuel.

The ripple effects of these increases extend beyond the immediate burden on consumers. Secondary costs such as transport fees from harbors to inland areas, customs and excise duties, and retail margins add to the strain on household budgets already contending with inflationary pressures.

Monthly tax contributions paint a vivid picture of the ongoing strain faced by South African drivers. Discovery Bank’s data reveals that on average, Discovery Insure clients cover around 1,690km per month, commuting at least three days a week. Considering this, the tax contributions for various popular car models underscore the financial impact on households.

As of May 1st, petrol prices stand at R25.49 per litre for 95-octane unleaded petrol, while diesel users pay R22.24 per litre for 0.005% diesel (wholesale) inland. The tax contributions for different car types per 100km travelled and their corresponding monthly tax burdens illustrate the extent of the financial strain.

The Department of Energy’s latest fuel price adjustments, effective from May 1st, include a 37 cents per litre increase for both Petrol 95 and Petrol 93. Conversely, Diesel 0.05% sees a decrease of 30 cents per litre, while Diesel 0.005% experiences a decrease of 36 cents per litre. Illuminating Paraffin also sees a decrease of 19 cents per litre.

These price fluctuations are influenced primarily by international petroleum costs and fluctuations in the rand/dollar exchange rate. Increased international product prices for petrol coupled with a depreciation of the rand against the US dollar contribute to the upward trajectory of fuel prices.

Inland and coastal price differentials further compound the financial strain, with varying official prices for different fuel types reflecting regional disparities in costs.

The cumulative effect of these ongoing increases in fuel costs and associated taxes places a substantial burden on South African households, particularly amidst broader economic challenges. As citizens navigate these financial pressures, the debate around the structure and allocation of fuel taxes gains prominence, highlighting the delicate balance between revenue generation and consumer affordability.



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