Slash the Fuel Levy by 50%

Statement by Dr Mark Burke MP – DA Spokesperson on Finance:

South African households are in the line of fire of the oil price shock. Many minimum wage workers spend a third of their wages on transport. Petrol price increases will drive up taxi fares, they will drive up food prices and they will drive down growth. We need to protect South Africans from them, especially if the price we pay is less patronage.

The Democratic Alliance is willing to work with the Minister of Finance to urgently reduce both the RAF and General Fuel Levies by 50% for the duration of the oil price shock, or as long as possible.

Combined the two levies contribute R6,35 to the overall price of fuel. A 50% reduction would dampen increases by R3,17 and provide immediate and essential relief to South Africans who are staring down the barrel of a massive petrol shock in a week’s time: petrol is set to increase by more than R5 per litre and Diesel by more than R9 per litre.

The DA is aware that such a pause in levies would affect tax revenue as well as RAF funding, totalling around R6,5 billion a month.

This is not insignificant, but the shock of not doing anything to protect South Africa’s fragile economy is likely far larger. Sharp petrol price increases will hurt GDP, increase inflation, and cripple household budgets.

Moreover, it is possible for the government to recover these lost funds without new taxes and without new debt.

We’re proposing a monthly drawdown as needed from the following sources:

• Demanding the Compensation Fund pay over its surpluses.
• Pulling surplus funds from SETAs.
• Giving TARS teeth so that departments are forced to find inefficiencies.
• Extending ghost worker audits to municipalities and state entities.

We deal with each of these in turn:

Over recent years, the National Treasury has given the Compensation Fund permission for the entity to retain sizable surpluses despite the fund having sufficient reserves to meet its liabilities. The Compensation for Occupational Injuries and Diseases (COID) Fund is meant to provide social security to workers, yet suffers from years of mismanagement – evidenced by audit failures and is likely overfunded. In its 2024/2025 annual report it applied to retain a R21,7 billion surplus (despite receiving a disclaimer audit opinion). That’s more than 3 months worth of fuel taxes relief.

As of 2024 it was estimated that the notorious SETAs – which the President indicated a willingness to reform – sit on R6.7 billion in annual surpluses. Enough for one month’s relief.

We need to be strengthening the TARS program (spending review) so that reluctant departments are forced to make cuts to outdated and inefficient programs. Despite having few teeth, TARS has already found almost R12 billion in savings over the medium term. That’s a further two months relief.

The ghost worker audit has flagged over 4 000 potential fraudulent workers, and many believe that ghost worker prevalence is far higher at a local government and state entity level where controls are lax. The savings from this is as yet undetermined.

What is more, many of these reforms would yield permanent savings, the fuel levy freeze is once off. In the long run South Africa’s finances won’t only be healthier because we were able to mitigate this oil shock, they will be stronger because spending will be less wasteful.

I will also today be writing to the President and the Minister of Finance to request urgent action on fuel price relief.

South Africans should not be forced to carry the full cost of an international conflict outside of our control, especially when the government continues to waste taxpayer money which we can control. Now is the time for decisive leadership that puts people first. We in the DA stand ready to find a way to do so.