Finance Minister Enoch Godongwana is set to deliver Budget 2026 on 25 February.
As anticipation builds about what the finance minister’s 2026 Budget speech will look like, analysts have predicted he might undo some of the relief motorists have felt in recent months by increasing the fuel levy.
Finance Minister Enoch Godongwana is set to deliver the budget speech next Wednesday in Cape Town. PwC is of the view that the National Treasury might consider another inflation-linked fuel levy increase, which could translate into higher petrol and diesel prices.
The fuel levy is a tax charged on every litre of fuel sold, with a portion going to the government and another to the Road Accident Fund (RAF levy) to compensate victims of motor vehicle accidents.
Fuel levy hike?
Godongwana announced the fuel levy hike last year to make up for the expected revenue loss after the National Treasury’s value-added tax (VAT) hike was scrapped. This was the first hike since 2021.
“Prior to the inflationary increase in 2025, the general fuel levy had not been adjusted since 2021 in light of high fuel prices,” said PwC.
“Budget 2025 included an inflationary increase in the general fuel levy for 2025-26. It is expected that the National Treasury will once again propose an inflationary increase in the general fuel levy in Budget 2026.”
While other factors, such as the rand’s strength and oil prices, influence fuel prices, an increase in the levy will definitely put pressure on motorists’ wallets.
ALSO READ: Budget 2026: Will Sars be able to avert tax increases?
RAF levy increase?
PwC predictions added that Godongwana might announce a RAF levy hike, which has not been increased in the last three years to support households and the economy.
The prediction comes despite Deputy Minister of Transport Mkhuleko Hlengwa stating they are not looking into increasing the levy.
“In light of fuel prices currently sitting at four-year lows, government may take the opportunity to increase the RAF levy in line with inflation to ease the burden on the RAF, which is running at a deficit on an annual basis and is technically insolvent,” reads the prediction.
“It has been reported that the deputy transport minister has stated that there is no intention to increase the levy, although the context of this comment appears to be in response to a suggestion from the RAF that a significant increase is required.”
Sin tax
PwC foresees an increase in sin taxes (excise duties) on both alcohol and tobacco. It also hopes the government will take action to combat illicit trade in the country.
“Illicit trade, particularly in respect of cigarettes, remains a major concern. Accordingly, we hope that the budget will propose additional measures to address illicit trade, government will ratify the World Health Organisation’s Protocol to Eliminate Illicit Trade in Tobacco Products in 2026, and will implement a track-and-trace system.”
Government’s guideline to direct its excise duty policy is currently 11% for wine, 23% for beer and 36% for spirits of the weighted average retail price, and 40% of the price of the most popular brand for tobacco.
PwC noted that the National Treasury published a policy paper titled the Taxation of Alcoholic Beverages for public comment in November 2024.
However, it does not anticipate National Treasury will include any proposals to fundamentally change the taxation of alcoholic beverages as proposed in the policy paper in Budget 2026, as stakeholder consultations continue.
“In light of this, we expect inflationary increases in excise duties for both alcohol and tobacco,” said PwC.
ALSO READ: Fuel levy hike about to hit: Will you survive the squeeze?
Gambling tax still on hold
PwC highlighted that the National Treasury released a draft discussion paper on a proposed national online gambling tax on 25 November 2025, inviting public comment, initially by 30 January 2026.
“The paper proposes the introduction of a national tax at a rate of 20% on the gross gambling revenue derived from online and interactive gambling activities,” said the firm.
“The comment deadline has subsequently been extended to 27 February 2026 to provide stakeholders with additional time to engage on the proposal. Against this background, it is anticipated that Budget 2026 will not make further pronouncements on the introduction of a national online gambling tax.”
A wealth tax has previously been proposed; however, Godongwana raised his views on introducing such a tax, citing that the current system is more effective at raising revenue and redistributing wealth and noted that, in addition to Personal Income Tax (PIT), the country already taxes wealth extensively through estate duty, transfer duty, donations tax, and securities transfer tax.
Therefore, PwC predicts that the minister will still not introduce a wealth tax in the upcoming budget. However, there will be continued focus on PIT compliance for high-net-worth individuals, particularly regarding offshore assets.
Increase tax-free thresholds
Benay Sager, executive head of DebtBusters, said he hopes the minister will announce a hike in the tax-free thresholds and reduce tax bracket creep in the upcoming speech.
“There has been no change to the tax tables over the past few years,” he said.
“Amending the brackets would provide consumers with more disposable income, allowing them to keep more of their earnings and manage their debt repayments more effectively.
“It would also free up money for saving or an emergency fund, particularly if incentivised by a tax-free savings allowance.”
ALSO READ: Treasury’s 20% online gambling tax stirs controversy
A boring budget speech
Johann Els, chief economist at PSG Financial Services, said he anticipates a boring budget, which he says is good news.
“More importantly, the 2025-26 outcome is likely to be materially better than the original targets, driven mainly by revenue over-performance rather than spending cuts,” he said.
“That reduces the need for unpleasant surprises. No major tax hikes. No emergency measures. Probably just the usual fuel levy and sin taxes.”
Els highlighted that VAT has held up better than weak real GDP would suggest. “Consumer spending and formal sector turnover have been firmer than expected, and compliance has improved as well.”
He noted that the labour market has stabilised at the margin, wage growth remains firm, and there’s been little bracket relief.
“Treasury is unlikely to account for all of the expected overrun in the budget, though, allowing for more positive surprises going forward,” he said. “Stronger South African Revenue Services (Sars) enforcement will also lift the effective tax take without raising headline rates. That reduces pressure for new tax measures.
“Treasury doesn’t need to shock anyone this year, and I doubt they will.”
NOW READ: Here is how much tax revenue Sars has collected since 1997