AA Backs Plan That Could Cut Fuel Prices by More Than 20% in South Africa

The Automobile Association has welcomed Finance Minister Enoch Godongwana’s proposal to phase out fuel levies, saying motorists have been carrying an unfair tax burden for years.

The Automobile Association (AA) has thrown its support behind Finance Minister Enoch Godongwana’s proposal to phase out the General Fuel Levy and Road Accident Fund (RAF) levy, a move that could significantly reduce fuel prices in South Africa.

Speaking recently, Godongwana said South Africa needs to find a way of gradually eliminating both levies, which currently generate billions of rand for the state each year.

The proposal could provide major relief for households, commuters and businesses struggling with high transport costs.

Fuel Levies Add More Than R6 Per Litre

The General Fuel Levy and RAF levy currently account for a substantial portion of the fuel price paid by motorists.

At current rates:

• The General Fuel Levy adds approximately R4.29 per litre of petrol.
• The RAF levy adds R2.25 per litre.
• Together, the levies contribute about R6.54 per litre to the price of petrol.

This means taxes make up roughly 22% of the retail petrol price.

For motorists filling a 50-litre tank, this equates to around R327 in levies alone.

AA Says Move Is Long Overdue

AA Chief Executive Bobby Ramagwede said the organisation welcomes the minister’s comments, arguing that fuel taxes affect every South African regardless of income level.

According to the AA, the burden does not only affect private motorists but also businesses, public transport operators and consumers who ultimately pay more for goods and services because of higher transport costs.

The organisation believes removing these levies would provide widespread economic benefits and reduce pressure on household budgets.

Review of Fuel Pricing System Needed

While the AA supports eliminating the levies, it says government should also review the Basic Fuel Price (BFP) formula.

The BFP, which reflects the cost of importing fuel into South Africa, remains the largest component of the fuel price.

The AA argues that a transparent review of the pricing formula should be conducted to ensure it still reflects modern market conditions and serves South Africa’s interests.

Revenue Challenge Remains

One of the biggest obstacles facing the proposal is government revenue.

The General Fuel Levy alone reportedly generates about R80 billion annually for the national fiscus.

Removing the levy would leave a substantial funding gap that government would need to replace through alternative revenue sources or spending cuts.

The AA argues that South Africa’s challenge is not necessarily revenue collection but rather expenditure management and efficient budget allocation.

Questions Around the RAF

The organisation has also questioned the long-term sustainability of the Road Accident Fund model.

According to the AA, South Africa should consider transitioning to a compulsory third-party insurance system similar to those used in many developed countries.

Supporters of the idea argue that such a system could reduce pressure on the RAF while creating a more sustainable framework for compensating road accident victims.

Major Relief for Consumers

If government eventually phases out both levies without introducing equivalent charges elsewhere, motorists could see a reduction of more than R6 per litre in fuel prices.

For consumers already battling rising living costs, such a reduction would provide meaningful relief and could help lower transport and logistics expenses throughout the economy.

However, experts caution that any changes would likely be implemented gradually, as government would first need to address the significant revenue shortfall created by removing the taxes.

For now, the proposal has reignited debate about fuel pricing, government spending and how South Africa can balance tax collection with economic growth.