The Budget Justice Coalition (BJC) welcomes the government’s decision to implement a temporary reduction in the fuel levy in response to rising global oil prices linked to the US-Israeli war on Iran. At a time when many South African households are already stretched beyond their limits, any measure that slows the immediate rise in transport and food costs is an important acknowledgement of the pressure facing ordinary people. However, from a pro-poor budgeting perspective, this intervention doesn’t go far enough and fails to recognise the cost-of-living crisis already facing poor households across the country.
The reduction is a drop in the ocean
For low-income households, fuel price increases are felt in the taxi fare to look for jobs the economy has failed to create, in the cost of transporting children to schools with increasingly constrained resources; but also for everyday sustenance, in the price of bread and maize meal, and in the rising cost of basic household energy needs as we approach winter. Currently, at least fifteen million South Africans (nearly a quarter of the population) are facing food insecurity, and the price of paraffin has almost doubled.
In addition, even before this current crisis recent studies have shown that the standard household food basket costs over R5000 per month which exceeds the national minimum wage and those dependent on grants are unable to purchase nutritious food either. The inherent nature of fuel price increases is that their most damaging effects are usually delayed, meaning South Africans will continue to suffer for months to come, even if the conflict came to an end today. Given the scale of the crisis, the government should be tackling food and energy poverty along the lines of how they addressed the COVID-19 crisis in 2020.
Our country is one that is marked by deep inequality, mass unemployment, and persistent poverty. South Africa remains one of the most unequal societies in the world, with unemployment falling hardest on young people, Black women, and working-class communities. For these households, rising fuel costs are a direct threat to dignity, mobility, and survival.
To address these challenges the government needs to tackle food and energy poverty in a coordinated way along the lines the President addressed the country’s energy supply problem. Currently, there is no single government body that coordinates and focuses specifically on food and energy poverty, and a coordinated intervention would require resources that address the cost of living crisis, like what was done during the COVID-19 pandemic.
In our submissions to the Portfolio Committees, the BJC has long advanced progressive and sustainable revenue-raising proposals that can be drawn on to protect poor and working-class households during periods of economic shock. Last month, we proposed tackling illicit financial flows and uncollected tax revenue, phasing out ineffective corporate tax incentives, restoring the corporate income tax rate to 28%, and exploring redistributive measures such as wealth, luxury, and inheritance taxes to raise the resources needed to protect poor households.
Gaps in the relief
But there are gaps in the relief announced yesterday such as the sharp increase in paraffin prices further exposes this gap. Many low-income households, particularly in informal settlements and under-served rural communities, rely on paraffin for cooking, heating, and lighting. A response that cushions motorists while leaving paraffin-dependent households exposed risks reproducing existing inequalities in how the state responds to economic shocks.
Furthermore, the one-month duration of this relief raises serious concerns about its adequacy and sustainability. Fuel price increases do not operate in isolation, but they ripple across the economy, driving up the cost of food, transport, and other basic goods. While the 30 day reduction may provide temporary breathing room, it does little to address the structural vulnerabilities that make households so exposed to global price volatility, in the context of ongoing tensions. Without longer-term, predictable interventions, families will continue to face cycles of crisis as prices fluctuate.
The role of the fiscal framework
Equally, National Treasury must urgently provide South Africans clarity on how the estimated revenue shortfall arising from this temporary levy reduction will be financed within the existing fiscal framework. While government has indicated that the measure “will be fiscally neutral”, it has not yet specified which revenue streams, reserves, or expenditure lines will absorb the cost. In a context where frontline public services remain under severe strain, it’s clear that temporary household relief can’t be financed through reductions elsewhere in education, healthcare or social protection. Previous attempts to finance spending through regressive VAT increases have shown that we cannot take the protection of communities for granted. A pro-poor budgeting approach requires that the cost of relief measures does not ultimately fall back on the very communities they are intended to protect. Instead, moments of fiscal windfall should be used in the service of building an economy that works for all South Africans, including funding a sustained response to fuel price instability caused by global shocks, so that the burden of international crises does not once again fall on poor households. The government should meaningfully consider raising additional, sustainable revenue through progressive taxation measures, such as raising corporate income tax and introducing a wealth tax targeting high-net-worth individuals.
The BJC reiterates the need for a more comprehensive and people-centred approach to cushioning households against economic shocks. This includes:
- Exploring progressive and sustainable fiscal measures that protect poor households from regressive cost increases;
- Ensuring that support for households is not limited to a once-off intervention, but lasts for as long as global fuel price shocks continue to drive up the cost of living, including communication on relief plans beyond April.
- Extending targeted support for household energy needs, including paraffin and electricity for low-income communities;
- Urgently providing public clarity from National Treasury on how the cost of these interventions will be financed, with clear assurances that poor households will not once again bear the burden of global crises through budget cuts to the programmes and public services that protect their dignity and livelihoods;
- Wielding the higher-than-expected revenues and fiscal windfalls to cushion frontline household costs rather than relying solely on temporary measures.
- Strengthening and subsidising safe, affordable public transport to reduce the burden on commuters;
At the same time, crises such as this one foregrounds the need to invest in affordable, reliable and green public transport systems to reduce dependence on fossil fuel-based mobility and improve access to economic opportunity.
While fiscal constraints are real, budget decisions are ultimately about priorities. A genuinely pro-poor budget must begin with the question: how will this decision be felt in the stomachs, homes, kitchens, classrooms, clinics, and taxi ranks of the poorest households?
The current moment demands more than temporary relief. It calls for sustained, redistributive, and people-centred budgeting that protects dignity, reduces vulnerability, and builds long-term resilience for the majority of South Africans.
For interviews, contact Letlhogonolo Letshele on 074 944 8952
The Budget Justice Coalition (BJC) is a coalition of civil society organisations that aims to collaboratively build people’s participation in and understanding of South Africa’s budget and planning processes. We’re a people-powered coalition fighting to make public money work for public good.