Following the scrapping of VAT increases, the government has announced an inflation-linked hike in the General Fuel Levy from next month.

According to the Zululand Observer, this was revealed by Finance Minister Enoch Godongwana, who delivered the 2025 Budget in Parliament yesterday afternoon.

This marks the first fuel levy increase in three years.

“For the 2025/26 fiscal year, this is the only new tax proposal I am announcing,” said Godongwana.

“It means from June 4 this year, the General Fuel Levy will increase by 16 cents per litre for petrol and by 15 cents per litre for diesel.

“Unfortunately, this tax measure alone will not close the fiscal gap over the medium term. The 2026 Budget will therefore need to propose new tax measures, aimed at raising R20b.”

Godongwana reiterated that VAT will remain at 15%, with the proposed increases in 2025/26 and 2026/27 dropped.

“As a result, the expansion of the zero-rated basket, which was included to cushion poorer households from the VAT rate increase, falls away,” said the minister.

“The reality, however, is that the decision to do away with the VAT increase, without a viable alternative source of revenue, significantly reduced our ability to fund additional government programmes and projects to the extent we had deemed necessary.”