Fuel levy hike on the table? Here are the potential tax increases in Budget 2026

As anticipation builds about what the finance minister’s 2026 Budget speech will look like, analysts have predicted he might undo some of the relief motorists have felt in recent months by increasing the fuel levy. Finance Minister Enoch Godongwana is set to deliver the budget speech next Wednesday in Cape Town. PwC is of the view that the National Treasury might consider another inflation-linked fuel levy increase, which could translate into higher petrol and diesel prices.

The fuel levy is a tax charged on every litre of fuel sold, with a portion going to the government and another to the Road Accident Fund (RAF levy) to compensate victims of motor vehicle accidents. Godongwana announced thefuel levy hike last year to make up for the expected revenue lossafter the National Treasury’s value-added tax (VAT) hike was scrapped. This was the first hike since 2021.

“Prior to the inflationary increase in 2025, the general fuel levy had not been adjusted since 2021 in light of high fuel prices,” said PwC. “Budget 2025 included an inflationary increase in the general fuel levy for 2025-26. It is expected that the National Treasury will once again propose an inflationary increase in the general fuel levy in Budget 2026.” While other factors, such as the rand’s strength and oil prices, influence fuel prices, an increase in the levy will definitely put pressure on motorists’ wallets.

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PwC predictions added that Godongwana might announce a RAF levy hike, which has not been increased in the last three years to support households and the economy. The prediction comes despite Deputy Minister of Transport Mkhuleko Hlengwa stating they are not looking into increasing the levy. “In light of fuel prices currently sitting at four-year lows, government may take the opportunity to increase the RAF levy in line with inflation to ease the burden on the RAF, which is running at a deficit on an annual basis and is technically insolvent,” reads the prediction. “It has been reported that the deputy transport minister has stated that there is no intention to increase the levy, although the context of this comment appears to be in response to a suggestion from the RAF that a significant increase is required.”

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