In South Africa, gasoline taxes and profit margins have increased in the last 15 years, with different levies and retail and wholesale margins now accounting for 45% of total fuel price.
With the exception of the 2014/15 and 2022/23 fiscal years, year-on-year fuel tax and margin increases have topped the consumer price index (CPI) every year since March 2009.
Wayne Duvenage, CEO of Organisation Undoing Tax Abuse (Outa), regarding previous gasoline costs in South Africa.
Outa also offered gasoline price figures from the fiscal year 2008/09 until 2022/23.
In recent years, South African fuel costs have risen significantly over the baseline fuel price (BFP). Prices per litre, according to Duvenage, are comprised of the following components:
- The BFP — the cost of the petrol before any money is spent on the many other taxes and levies applied.
- “Other levies” — these comprise transport, secondary storage, distribution costs, and one or two smaller charges.
- Wholesale and retail margins — the markup wholesalers and retailers are allowed to add.
- Fuel levy — the tax on each litre of fuel sold.
- Road accident fund (RAF) — levy placed on fuel to fund the RAF.
While the BFP has climbed dramatically — roughly 145% — during the 2008/09 fiscal year, the growth has not been as dramatic as the increase in gasoline price add-ons over the same time period.
Over the fiscal years 2008/09 and 2022/23, the total costs added to the BFP price than quadrupled, from R3.45 to R10.29.
The graph below depicts how margins and taxes have increased South African fuel prices over time. That does not include the basic gasoline price.
Despite a modest drop in 2022/23, the gasoline tax has nearly quadrupled from 2008/09.
South Africa witnessed a minor fall in the fuel charge in 2022/23 because the government was obliged to lower the tax to R1.50 per litre from April to June 2022, then by R0.75 in July 2022, to offer relief from rising fuel expenses caused by the Ukrainian war.
The RAF levy, on the other hand, has witnessed the greatest relative growth.
The litre fee was R0.47 in 2008/09 and has subsequently increased to R2.18 – an almost 364% increase. From March 2021, the RAF levy has been steady.
It will also not increase this year as part of the government’s tax relief initiatives.
“In addition to the tax measures I have announced to promote investments in renewable energy, the general fuel levy and the Road Accident Fund levy will not be increased this year,” finance minister Enoch Godongwana said in his 2023 budget speech.
It should be emphasised that retail margins have also increased dramatically during the last 15 years. It went up from R0.65 to R2.33 per litre.
The wholesale margin, on the other hand, has been rather stable throughout the same time period.
From 2008/09, the “other levies” component has risen dramatically, from R0.64 to R1.87 per litre.
Fuel tax increases vs CPI
We plotted fuel price tax and margin increases against the average yearly consumer price index to compare them to inflation over time (CPI).
From 2009/10 and 2022/23, year-on-year growth in fuel taxes and margins topped CPI in all but two years.
The largest tax and margin rise was 16.27% in the 2015/16 fiscal year. In comparison, the CPI was 4.60% in 2015 and 6.40% in 2016.
Three years before, South African motorists faced a huge hike in fuel tax and margins. The BFP add-ons grew by 13.59% during the fiscal year 2012/13.
For the last 14 years, the graphic below compares CPI to year-on-year fuel tax and margin increases.
