Finance Minister announces fuel excise tax reduction and allocates billions to combat gender-based violence

Finance Minister Enoch Godongwana announced the provision of temporary assistance amounting to R10 billion in the form of a reduction in the fuel levy. This measure is aimed at mitigating the effects of rising oil prices caused by the conflict in the Middle East and supporting households and businesses.

During the presentation of the Medium Term Budget Policy Statement for 2026 (MTBPS) in Parliament yesterday, Godongwana noted that the conflict has led to an increase in global oil prices, which has resulted in a sharp rise in the cost of living for the population and businesses.

He stated that thanks to the restoration of fiscal reserves, the government is in a stronger position to react, including the reintroduction of a temporary fuel levy reduction. The Minister informed parliamentarians that the National Treasury is aware of the pressure that rising fuel prices are putting on businesses and families.

Godongwana announced a reduction in the fuel levy of R3 per litre of diesel and R1.50 per litre of petrol. These changes will take effect from November 4, 2026, and will last until December 1, 2026. Further assistance will be provided in a smaller amount until January 5, 2027.

The Minister clarified that these measures will provide support amounting to R10 billion, with the fiscal cost being R10 billion in lost revenue.

To finance this temporary support of R10 billion, which was transferred to the Central Energy Fund (CEF), it will be returned to the National Income Fund and placed in the Contingency Reserve. Director-General Duncan Peters explained that the origin of these R10 billion is related to the overspending of revenues for 2025/26, which was allocated in the Special Appropriation Bill for the CEF.

Peters explained that the CEF will receive these funds through the Special Appropriation Bill, return them to the National Income Fund, and then these R10 billion will be used to compensate for the costs of the fuel levy reduction.

As part of the MTBPS, Godongwana projected real economic growth at 1.2%, which is lower than the forecast of 1.6% made in February. However, growth is expected to reach 1.6% in 2027 and 2% by 2029.

The Minister added that gross tax revenue is projected to increase from R2.14 trillion in the current year to R2.53 trillion in 2029/30. Various funds were allocated through the Appropriation Bill: R6.2 billion for unforeseen and unavoidable expenses, mainly for disaster relief and rehabilitation.

Additionally, R823 million was allocated to SANDF for troop deployment to assist the police in combating crime, and R516 million for the Madlang, Hampepe, and Nkabinde inquiry commissions. Godongwana also mentioned that the Special Appropriation Bill includes funds for Parliament and for the continuation of medical services for South African Armed Forces veterans.

SARS will also receive allocations to strengthen tax collection measures. Within this corrective budget, R150 million has been allocated to improve the technical capabilities of the digital services unit for developing the MyMzansi application, which will allow citizens to access government services through a single digital platform. Furthermore, the Contingency Reserve will increase to R10 billion to respond to potential threats related to El Niño and other risks.

It was noted that projects valued at at least R20 billion are currently being assessed in the infrastructure budget fund. Godongwana also stated that next year the SAPS fleet will be modernized with R810 million, and R2.2 billion has been added to enhance the independence of the judicial system.

The MK party stated that the 1.6% growth forecast proved unrealistic, and that real economic growth was 1.1%. The party called this a 'heavy accusation against the management of our economy' and suggested that the fuel price assistance was announced in connection with local elections.

DA Finance representative Kingsley Wakelin welcomed the National Treasury's steps in the MTBPS, especially the commitment to the fiscal anchor, continued primary surplus growth, and debt stabilization for the first time in almost two decades. He emphasized that these are important steps towards restoring confidence in South Africa's public finances after the deterioration from 2008 to 2024, but noted that fiscal stability must be the foundation of economic growth, not the limit of government ambition.

ActionSA MP Alan Bisley expressed disappointment with Godongwana's announcement of short-term fuel price reduction measures, which are insufficiently effective to alleviate the devastating cost of living crisis and do not address the fundamental problems undermining the South African economy. He stated that the temporary fuel levy reduction of R10 billion, valid until January 2027, is grossly inadequate to solve the high fuel price problem, as these costs have led to increased prices for food, basic goods and services, as well as almost all transport-dependent sectors of the economy.

Finance Minister Enoch Godongwana announced the allocation of an additional R45.5 billion for expenditures, under which the Madlanga Commission and two other investigative commissions will receive additional government funding of R516 million for the 2026/27 financial year.

These funds are intended to support crime-fighting operations, disaster relief, and measures to reduce the burden on households. Godongwana announced these allocations during his speech as part of the Medium Term Budget Policy Statement (MTBPS) on Wednesday.

He specified that the funding will ensure the continuity of work for the Madlanga, Hampepe, and Nkabinde commissions. The Minister stated: 'R560 million for the Madlanga Commission, the Hampepe and Nkabinde investigative commissions.'

The additional allocation comes against the backdrop of the Madlanga Commission's investigation, which is reviewing testimony regarding alleged criminal networks and corruption within the criminal justice system. The activities of this commission have attracted public attention and led to the arrest of high-ranking police and municipal law enforcement officials.

Among those detained are former Deputy National Commissioner of Police Shadrak Sibiya, South African Police Service (SAPS) Sergeant Fanny Nkosi, who is suspended, and Julius Mkhwanazi, former Deputy Head of the Ekurhuleni Metropolitan Police Department (EMPD). It is important to note that the allegations raised during the investigation remain subject to due legal process, and the arrests themselves are not proof of guilt.

Godongwana did not provide a detailed breakdown of the R516 million among the three commissions during his address. This funding is part of a broader package aimed at strengthening the state's capacity to investigate and prosecute crimes, recover proceeds from illegal activities, and improve anti-corruption efforts.

Crime and corruption place pressure on public finances, weaken governance, and divert resources from vital services. To cover additional expenses, the government has identified savings through low-priority programs and administrative inefficiencies in national departments. Other measures include combating fraud in social benefit claims, eliminating inefficiencies and attempts to gain advantage in housing programs, and utilizing surpluses held by state structures.

The additional funds will also go towards disaster response and rehabilitation, as well as deploying soldiers to combat gangs and illegal mining. Godongwana announced the allocation of R6.2 billion for unforeseen and unavoidable expenses, most of which is designated for disaster relief and rehabilitation.

Furthermore, he mentioned the transfer of R1.9 billion from the previous fiscal year, R4.3 billion for targeted funding and expenditures, and R823 million for Operation Prosper, a military operation targeting illegal mining. As an additional measure to ease the financial burden, the minister announced a temporary reduction in fuel excise duties.

He stated: 'To provide temporary assistance, the excise duty on diesel fuel will be reduced by R3.00 per liter and by R1.50 per liter of petrol.'

The Automobile Association (AA) has urged the National Treasury to implement an immediate reduction in fuel taxes, cautioning that petrol prices might rise by up to R4.58 per litre in November if current trends are maintained.

This appeal follows recent fuel price escalations effective October 7th, which brought both petrol and diesel prices to unprecedented highs, thereby intensifying financial strain on South African households and businesses.

The AA's request surfaces amid the Road Accident Fund's (RAF) annual report for the 2025/26 fiscal year, which suggested an increase to the RAF levy component of the fuel price.

Currently, the RAF levy is set at R2.25 per litre, following a seven-cent increment in April. The AA expressed serious concern that a proposed hike to R3 would place additional burdens on consumers already grappling with escalating living expenses.

The organization advocated for the complete abolition of the RAF levy, suggesting that alternative methods should be explored to finance the RAF's mandated functions.

Bobby Ramagwede, the CEO of the AA, stated that the consideration of such a path by the new RAF CEO, Waseem Carrim, appointed by Cabinet recently, was deeply worrying. He emphasized that the RAF's financial standing should not be managed by imposing extra costs on drivers.

Ramagwede further commented on concerns regarding the RAF being under-capitalized, noting that liabilities surpass assets due to decreased fuel sales. He countered that penalizing consumers is inappropriate, especially since net RAF levy collections reached R47.8 billion during the specified financial year.

Призывы к долгосрочному снижению топливных налогов

The AA also criticized the government's strategy for providing fuel price relief, arguing that the R3-per-litre decrease in fuel levies introduced in April offered only short-term assistance. This measure reportedly cost the national treasury around R17 billion.

The organization advised the National Treasury to contemplate further relief measures instead of raising fuel-related taxes. Ramagwede asserted that this is the moment for the National Treasury to alleviate consumer hardship through genuine levy relief, contrasting it with the approach of increasing levies.

Furthermore, the AA disputed Finance Minister Enoch Godongwana's worries that additional fuel price relief might increase pressure on taxpayers or necessitate higher government borrowing. The organization suggested that a more honest assessment of the situation should begin by examining the costs associated with the government wage bill and overall spending, viewed through the perspective of the struggling taxpayer.