SANTACO raises alarm over fuel levy hike's impact on taxi industry profits

The South African National Taxi Council (SANTACO) has expressed serious concerns that the recently announced fuel levy increase by Finance Minister Enoch Godongwana could significantly harm the profitability of the taxi industry.

During his budget speech on Wednesday, the minister announced the first fuel levy hike in three years, with petrol set to increase by 16 cents per litre and diesel by 15 cents per litre.

“The budget proposes an inflation-linked increase to the general fuel levy for the 2025 fiscal year. This is the only new tax proposal that I’m announcing,” Godongwana said.

While the business community welcomed the minister’s reversal of the controversial Value Added Tax (VAT) proposal, they also expressed concern over the fuel levy’s potential knock-on effects and the long-term fiscal risks it may pose.

SANTACO's Western Cape spokesperson, Mandla Hermanus, said the proposed fuel levy increase will harm the taxi industry.

The taxi industry plays a significant role in South Africa’s public transport system, transporting over 60% of daily commuters. It is estimated to generate approximately R50 billion annually.

"This obviously is going to hit our bottom line because it will affect our overall profitability as the minibus taxi industry, given that we still remain unsubsidised, which means we subsidise our customers when we look at how we adjust our fare," Hermanus told broadcaster Newzroom Afrika.

Despite the increase, Hermanus said that the industry was not considering a fare hike at this stage. He revealed that fares are typically reviewed and adjusted annually, based on a variety of operational factors.

"This increase, as much as it's going to hit us, we are not anticipating that there will be price increases as a result of the adjustment in the fuel price due to the levy.

"Because ordinarily, we don't relook at our prices every time there is a fuel adjustment. Most of the time, we adjust our prices on an annual basis, where we look at all the various factors and how much it will cost us to run our business."