Diesel levy refund extended to take the pressure off food prices

The diesel levy refund will be extended to the manufacturers of food products, Finance Minister Enoch Godongwana announced in the Budget.

The refund was introduced in 2000 to provide full or partial relief for the fuel and Road Accident Fund (RAF) levies to the farming, forestry, fishing and mining sectors.

National Treasury said a similar refund on the RAF levy for diesel used in the manufacturing process, such as for generators, will be extended to the manufacturers of foodstuffs, to limit the impact of power cuts on food prices.

The refund will take effect from 1 April 2023, with refund payments taking place once the system is developed. It will be in place for two years until 31 March 2025.

Althea Soobyah, director: tax consulting at Mazars, said because the intervention will only take effect from 1 April, and refund payments will be delayed while the system is being developed, this may be a case of “too little too late” for manufacturers and, by extension, ordinary South Africans, who will have to bear the burden of increased food prices for a while before any relief materialises.

Fuel levies unchanged

The government will, as was the case last year, not increase the general fuel levy and RAF levy in 2023/24.

The general fuel levy is R3.85 per litre of petrol and R3.70 per litre of diesel, while the RAF levy is R2.18 per litre of petrol and diesel.

To reduce pressure on households and businesses, no changes were made to the general fuel levy or the RAF levy in the 2022 Budget. Additional temporary relief was provided for four months at a cost of R10.5 billion.

In 2023/24, the government will again keep these levies unchanged, leading to the fiscus foregoing revenue of R4bn.