Fuel levy relief: The problem isn’t money, it’s political will

South Africans are facing increases of more than R10 a litre for diesel and over R5 a litre for petrol as of this week. The consequences on economic growth and household budgets are as dire as they are obvious, but it doesn’t have to be this bad.

The minister of finance can temporarily reduce fuel levies with the stroke of a pen. If he cuts levies by 50%, this will reduce fuel price increases by R3.17. Filling up tanks will still be painful, but the finance minister would have cut that pain in half for petrol buyers and by almost a third for diesel consumers.

On Wednesday, finance minister Enoch Godongwana finally and very reluctantly provided something adjacent to hope when he disclosed in parliament that a cabinet committee consisting entirely of ANC ministers is to look at the issue. The problem is that ANC committees are not known for bold and decisive action.

Five days later, there has been no movement. Meanwhile countries including Namibia, Australia, Spain, Portugal, Vietnam and Brazil have all recently announced various forms of fuel-tax relief.

Already, constituents are telling us that some filling stations have dramatically increased diesel prices. Farmers are panicking and shoving diesel into every container they can find ahead of Wednesday. The best course is for the minister to act now, and certainly before midnight on Tuesday.

ANC action

There are those who argue that the fiscus can’t afford fuel levy relief. They are wrong. What’s missing isn’t money – it’s political will. Every year, National Treasury grants overfunded entities with atrocious audit findings permission to keep their surpluses. In 2024, it’s estimated that sector education and training authorities had R6.7bn in surpluses. Coincidentally we estimate that a 50% reduction in fuel levies for one month would cost about R6.5bn.

One of the most egregious examples of retained surpluses is the Compensation for Occupational Injuries and Diseases Fund. The entity is considered overfunded and consistently has dismal audit findings. Yet in its last annual report it disclosed that it had asked National Treasury if it could keep its R21.7bn surplus.

There are other ways we can make up a few months of lost fuel levy revenue within this financial year. The spending review can be given more teeth, and ghost worker audits can be rolled out to local municipalities and government entities. We do not expect fuel levy relief to be permanent. As difficult as geopolitics is to predict, the signs are that the events in the Middle East are causing a temporary shock to prices, not a permanent change.

The cost of not acting is likely far higher than R6.5bn a month. Petrol prices will hit inflation, economic growth and consumer confidence. The problem isn’t money, it’s political will.

If the finance minister acts at regular committee speed, it will be too little, too late – if at all. While South Africa cannot control this conflict, we can control our spending. 

The DA is willing to help in whatever way possible to make a fuel levy reduction happen. However, if the ANC does not act, it will be up to it to explain to South Africans why we are paying R10 more for a litre of diesel when some of this pain could have been mitigated.

Dr Mark Burke is the DA spokesperson on finance.

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