The impact of a fuel levy on economic growth in South Africa


  • Thobeka Ncanywa University of Limpopo
  • Nosipho Mgwangqa University of Fort Hare



excise tax, tax revenue, vector error correction model, expenditure


Government expenditure is one of the factors that could influence economic growth and it depends on borrowing or on the amount of tax revenue. A fuel levy, as an excise tax charged on petroleum products such as petrol, diesel and biodiesel, can be an important source of revenue for the government. It can, however, be a burden on fuel consumers. The present study, as an effort to address this controversy, used the vector autoregressive approach to examine the impact of fuel levies on economic growth in South Africa. The results showed a long-run unidirectional negative relationship between economic growth and fuel levy. The conclusion was that the economy needs to grow at a higher rate so as to boost tax revenues and public expenditure. Strong revenue collection, therefore, depends on highly increasing economic growth and efficient tax administration. The implication of a growth-oriented tax system is to minimise distortions created by the tax system and create incentives for drivers of economic growth.


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Author Biographies

Thobeka Ncanywa, University of Limpopo

Department of Economics

Senior Lecturer in Economics

Nosipho Mgwangqa, University of Fort Hare

Department of Economics



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How to Cite

Ncanywa, T., & Mgwangqa, N. (2018). The impact of a fuel levy on economic growth in South Africa. Journal of Energy in Southern Africa, 29(1), 41–49.