South Africa’s government is considering a long-term overhaul of its fuel taxation system that could eventually remove all fuel-related levies, potentially reducing the tax component of petrol prices by R6.5833 per litre.
Finance Minister Enoch Godongwana outlined the direction of the National Treasury’s plans during an interview with 702 radio, highlighting the need to move beyond temporary tax cuts as a way of easing pressure on motorists.
However, scrapping fuel taxes would create a significant challenge for public finances. The General Fuel Levy (GFL) alone generates approximately R80 billion annually, meaning the government would need to identify alternative revenue sources before it could permanently eliminate the charge without creating a substantial hole in the national budget.
The comments come as South African motorists continue to face high fuel costs following record prices in October 2026.
Temporary fuel tax relief extended into early 2027
During his Medium-Term Budget Policy Statement on 21 October 2026, Godongwana announced another temporary reduction in the General Fuel Levy to provide some relief to consumers.
The initial reduction will run from 4 November to 1 December 2026. During this period, the levy will be reduced by R1.50 per litre for petrol and R3.00 per litre for diesel.
The relief will subsequently continue at a lower level until 5 January 2027. Under this arrangement, the reduction will amount to R1.00 per litre for petrol and R1.50 per litre for diesel.
To finance the intervention, the government will return R10 billion previously transferred to the Central Energy Fund to the National Revenue Fund, with the money allocated to the Contingency Reserve.
The latest intervention follows a series of adjustments earlier in 2026. In April, Treasury reduced the General Fuel Levy by R3.00 per litre for both petrol and diesel. The full petrol reduction remained in place during May, while diesel received an additional reduction of 93 cents per litre.
In June, the relief was reduced to R1.50 per litre for petrol and R1.96 per litre for diesel. The normal levy was restored for both fuel types in July.
These measures illustrate the difficulty of balancing immediate cost-of-living pressures against the government’s need to maintain stable revenue.
October’s record prices added to that pressure. Inland motorists faced a price of R30.25 per litre for 95-octane unleaded petrol, while the wholesale price of 50ppm diesel reached R33.29 per litre.
The source article attributes the increase partly to higher international oil prices associated with the United States’ war with Iran in the Middle East.
Treasury weighs the future of the General Fuel Levy
Godongwana has previously cautioned against expecting repeated fuel tax reductions whenever international oil prices rise. He argued that permanently offsetting higher fuel costs through the national budget would ultimately shift the burden to taxpayers or increase government borrowing.
The minister’s latest comments indicate that Treasury is examining the underlying structure of fuel taxation rather than relying exclusively on temporary interventions.
Two charges are central to that discussion: the General Fuel Levy and the Road Accident Fund (RAF) levy.
The RAF levy currently stands at R2.25 per litre, while the General Fuel Levy amounts to R4.29 per litre. Godongwana referred to the RAF charge as approximately R2 per litre during his radio interview, explaining that removing it could substantially reduce the price paid by motorists.
Fuel is also subject to customs and excise duty of four cents per litre and a petroleum products levy of 0.33 cents per litre.
According to Godongwana, changing the funding model of the Road Accident Fund could reduce its reliance on the levy collected through fuel sales. Such a change would, however, require a different mechanism to finance the fund’s responsibilities.
The broader challenge concerns the General Fuel Levy. Its annual contribution of approximately R80 billion makes it a substantial source of government revenue. Eliminating it would therefore require a credible plan to replace that income or adjust public spending accordingly.
Godongwana acknowledged that Treasury would need to determine how to close the resulting funding gap. The issue involves competing priorities, including consumer relief, public services, taxation and borrowing.
For motorists, the prospect of lower fuel taxes offers the possibility of longer-term relief beyond temporary reductions. Nevertheless, the government has not yet established a detailed implementation timetable or confirmed how the lost revenue would be replaced.
The proposed phase-out should therefore be understood as a long-term policy direction rather than a confirmed decision to abolish all fuel taxes immediately.