The South African Revenue Service (SARS) has reported a significant 6.3% drop in fuel levy collections for the most recent financial year, collecting R85.8 billion compared to R91.5 billion the previous year. This decline highlights shifting consumption patterns in South Africa’s energy landscape, even as overall tax revenue surpassed expectations.

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Fuel Demand Falls as Solar Rises

According to SARS Commissioner Edward Kieswetter, the decrease in collections was largely driven by a reduction in fuel usage, especially diesel. This shift stems from improved electricity generation by Eskom, coupled with a growing transition to rooftop solar systems. With fewer households and businesses relying on diesel generators to power through load shedding, demand for diesel as an alternative energy source has weakened.

A Surprise Upside for Treasury

Despite the year-on-year decline, fuel levy revenue exceeded mid-year projections. National Treasury had anticipated bringing in only R82.4 billion from the general fuel levy (GFL) due to suppressed demand from motorists and a substantial once-off diesel refund granted to farmers and food producers. However, the actual amount collected exceeded this estimate by R3.4 billion, a pleasant surprise that contributed approximately 4% to SARS’ record tax haul of R2.303 trillion.

No Fuel Levy Hike in 2025

In his budget speech delivered in March, Finance Minister Enoch Godongwana confirmed that there would be no increase in the GFL or the Road Accident Fund (RAF) levy for the upcoming 2025/26 financial year. This marks the third consecutive year of unchanged rates, aimed at cushioning consumers from inflationary pressures linked to fuel prices.

“To mitigate the effects of higher inflation arising from fuel price increases, the general fuel levy has remained unchanged since 2022,” Godongwana stated, noting that the decision will provide an estimated R4 billion in tax relief.

Additionally, the customs and excise levy will also remain frozen during the same period.

Carbon Levy Adjustments

While the main fuel levies hold steady, the Carbon Fuel Levy saw a modest increase, in line with the Carbon Tax Act of 2019. As of 2 April 2025, the levy rose by 3 cents per litre—now sitting at 14c/litre for petrol and 17c/litre for diesel.

2025/26 Fuel Tax Breakdown

Motorists will still shoulder a hefty load in combined fuel taxes. The unchanged general fuel levy and RAF levy, combined with the revised carbon levy, underscore the ongoing fiscal balancing act between encouraging cleaner energy use and maintaining essential revenue streams.

Even with a shrinking slice from fuel levies, SARS’ stronger-than-expected performance highlights both resilience in tax collection and evolving energy consumption habits in a transforming economy.