EFF slams 4% fuel levy hike, warns of economic inequality

Economic Freedom Fighters (EFF) have formally challenged the proposed 4% fuel levy increase announced by Finance Minister Enoch Godongwana in Budget 3.0, raising constitutional and legislative concerns over its validity.

In a strongly worded letter addressed to the Minister, the EFF firmly rejected the proposal, citing its disproportionate impact on the poor and working-class communities.

The party has also written to National Assembly Speaker Thoko Didiza and the Chairperson of the Parliamentary Standing Committee on Finance, calling for an urgent inquiry into the legality and socioeconomic implications of the proposed levy.

The proposed increase — the first since the 2021/22 fiscal year — would raise the fuel levy by 16 cents per litre for petrol and 15 cents for diesel, pushing the rate from R3.85 to R4.01 per litre.

According to the National Treasury, the hike is expected to generate R23 billion over the next three years, offering modest fiscal relief following the abandonment of a VAT increase that would have yielded R75 billion.

The EFF contended that the fuel levy, as a flat consumption tax, is inherently regressive and exacerbated economic inequality.

According to the National Treasury, if all this goes well, it will generate R23 billion over three years — a far cry from the R75 billion that would’ve come from the scrapped VAT hike, but still a meaningful boost in a tight fiscal climate.

The EFF argued that this will impact on the costs of transporting goods and services, which leads to increases in costs of food.

“In a society where over 18.2 million people are recipients of social grants, and nearly 45% of the population lives below the upper-bound poverty line, the increase in the fuel levy will have an immediate and cascading effect on the cost of living.

“Unlike income taxes, the fuel levy is a consumption-based tax. It is not linked to income or wealth, and therefore applies uniformly across all income groups, regardless of ability to pay,” the party said in a statement.

“The impact is particularly severe in areas where household expenditure on transport and food exceeds 50% of income—a situation affecting the vast majority of social grant recipients and informal workers.”

Meanwhile, members of parliament (MPs) have raised concerns over the National Treasury’s decision to increase the fuel levy, arguing that its economic impact may be significantly more severe than a hike in value-added tax (VAT).

kamogelo.moichela@iol.co.za

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