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Updated 17 Dec 2018

Budget Speech 2018: Increase in fuel and RAF levies

SA Motorists brace for combined 52cents a litre impact of higher fuel and RAF levies.

23 February 2018  Share  0 comments  Print

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South African motorists will have to fork out more when filling up their petrol tanks thanks to increases in both the fuel and Road Accident Fund (RAF) levies, which were announced by Finance Minister Malusi Gigaba in his 2018 budget speech today.

The general fuel levy will rise by 22 cents per litre while the RAF levy increases by 30 cents per litre with effect from 4 April 2018, resulting in a combined 52 cents in additional money that consumers will need to pay for each litre of fuel.

Related: 4 Mega-trends set to impact the transport and logistics sector

Motorists are also likely to be impacted by a higher value-added tax (VAT) rate, which Gigaba raised to 15% from 14%, on new vehicle purchases as well as tyres, parts and other vehicle accessories. Aspirant owners of luxury cars will also be hit by a higher ad valorem tax on such vehicles.

How will the Rand react?

“The increased RAF and fuel levies, along with the rise in VAT, will certainly have some inflationary impact,” said Mr Craig Polkinghorne, Head of Business and Commercial Banking at Standard Bank. “However, if the budget is judged by the market to be business and investor friendly then the rand is likely to react positively, which in turn will ease inflationary pressures by reducing the cost of imported fuel and other goods.”

Related: Trends affecting transport that every South African logistics business should prepare for

Gigaba’s 2018 Budget Speech came shortly after a report by Statistics South Africa showed that inflation eased to 4.4% in January, down from 4.7% in December. That was the tenth consecutive month that inflation has remained within the Reserve Bank’s target band of 3% to 6%.

The rand was trading at R11.6447 per dollar at 15:17pm, compared to R11.7193 just prior to Gigaba’s 2018 Budget speech.

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