South Africa has announced a temporary reduction in fuel tax to cushion the impact of rising global oil prices triggered by the ongoing conflict involving Iran, even as pump prices climbed sharply in one of the steepest increases on record.
According to authorities, the measure, announced on Tuesday, is aimed at easing pressure on consumers amid growing economic concerns.
In a joint statement, the finance and petroleum ministries disclosed that the general fuel levy would be reduced by three rand ($0.18) per litre for a month.
The government, however, acknowledged that the intervention would come at a high fiscal cost.
The tax relief is expected to result in about six billion rand ($352 million) in foregone revenue, though authorities said the losses would be recovered through other means to maintain fiscal balance.
Despite the tax cut, fuel prices are set to rise steeply across the country.
Diesel is projected to increase by more than seven rand per litre, representing a 40 per cent jump, while petrol—though still relatively cheaper, will rise by about 15 per cent.
Paraffin, a critical energy source for many low-income households used for cooking, heating, and lighting, is expected to surge by as much as 93 per cent.
The development has raised concerns about how the government intends to adjust its budget to accommodate the revenue shortfall.
Speaking to journalists, Finance Minister Enoch Godongwana admitted uncertainty over funding.
“I don’t know where I’m going to find this money for now,” AFP quoted the Minister as saying.
The government noted that additional measures were being considered to support households and key sectors affected by the rising costs.
“Work is underway on a broader package of measures to support households and key sectors of the economy,” the statement said.
