Why government would fall short of cash if the fuel levy is scrapped

SarahJuly 5, 2022

1 minute read

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“Scrapping the fuel levy means that the rich would also receive that benefit. So, from a point of equity and reducing poverty, it would make more sense to increase cash transfers to the poor and to leave the fuel tax as it is.” (Photo by Per-Anders Pettersson/Getty Images)

Calls have come from many quarters to do away with the general fuel levy, given its contribution to the record-breaking price of fuel. Yet, it also contributes R90-billion to the fiscus and experts contend that, should it be scrapped, the government would have few ways to raise a similar amount.

The general fuel levy is a tax on each litre of fuel sold and is pegged at R3.93 a litre (up from R3.77 last year). The Road Accident Fund levy is R2.18 a litre (up from R2.07 last year). Combined, they add R6.11 to every litre of petrol and diesel sold in the country, according to the Automobile Association.