SA’s fuel tax cuts fall short on protecting vulnerable households

South Africa’s response to fuel price shocks should be better targeted. A more equitable approach would shield vulnerable households first — not subsidise the biggest fuel consumers. According to Fatih Birol, executive director of the International Energy Agency, the world is facing an energy crisis worse “than two major oil shocks put together”. For South Africa, a country deeply dependent on imported liquid fuels, that warning carries particular weight. When fuel prices spike, governments face intense pressure to act fast — but how relief is designed matters as much as whether it is provided. South Africa’s default response overwhelmingly benefits wealthier households and fuel-intensive industries, while leaving the most vulnerable behind. To understand how the current fuel crisis might play out, we should learn from previous experiences. The last time South Africa experienced a real shock in liquid fuel prices was during the Russia-Ukraine war in 2022, which triggered record oil prices and exposed the country’s deep import dependency. Measures to shield consumers from high prices were applied from 1 April to 3 August 2022, costing the fiscus R10.5 billion in foregone tax revenue in that financial year. However, this amount was less than a quarter of the R47.4 billion in forgone revenue over the same period from the VAT zero-rating on liquid fuels and the diesel refunds that are provided as a subsidy measure to certain industries and producers. However, no short-term remedies were applied to illuminating paraffin and liquefied petroleum gas (LPG), both of which are critical fuels for cooking and heating in many low-income households. As of 2023, about 2.5% of households, including some of the poorest, used illuminating paraffin and about 6.8% used LPG. Paraffin use for cooking was particularly high in Gauteng, Eastern Cape and Free State. History is now repeating itself — and the same blind spots remain. In 2026, the global fuel price shock caused by the conflict