Diesel tax bombshell: Govt scraps levies as Zimbabwe fuel costs soar above region

The Government has suspended all taxes and levies on diesel with effect from 3 April, in a major policy shift aimed at easing the cost of living and stabilising the economy.

In a statement issued on 2 April, Finance Minister Mthuli Ncube said Treasury had removed several charges - including excise duty, the ZINARA road levy, carbon tax and the strategic reserve levy. These taxes amount to about US$0.54 per litre, forming a significant portion of the diesel pump price.

The intervention comes as Zimbabwe's fuel prices have risen to some of the highest in the region, driven largely by a heavy tax regime layered onto import costs.

According to the Zimbabwe Energy Regulatory Authority (ZERA), diesel was recently selling at around US$2.05 per litre, while petrol reached US$2.17 per litre.

Analysts say a substantial share of the pump price is made up of government‑imposed taxes and levies. In some cases, taxes account for nearly 40% of the final price, with estimates showing up to US$0.86 in combined charges on petrol and more than US$0.40 on diesel.

This tax‑heavy structure has made Zimbabwe an outlier in the Southern African region.

While Zimbabwean motorists pay above US$2 per litre, neighbouring countries remain significantly cheaper. Petrol averages about US$1.19 in South Africa, US$1.14–US$1.31 in Botswana and Mozambique, and roughly US$1.37 in Zambia.  
Even landlocked Zambia — which faces similar logistical constraints — maintains lower fuel prices, underscoring the impact of domestic policy choices.

Economic commentators have long argued that Zimbabwe's fuel pricing model is heavily influenced by fiscal measures, with multiple layers of taxation pushing prices upward.

Diesel is a critical input across the economy, powering public transport, agriculture, mining and freight. Any increase in its price quickly feeds into higher costs of goods and services, driving inflation and eroding household incomes.

Government said the removal of diesel taxes is intended to cushion businesses, stabilise prices and anchor inflation expectations amid global oil price volatility driven by geopolitical tensions.

However, the relief applies only to diesel, with petrol taxes remaining unchanged.

Treasury acknowledged that the move represents a significant revenue sacrifice but said it is necessary to protect productive sectors and support economic recovery.

Economists say the policy could bring short‑term relief, but warn that long‑term fuel price stability will require broader reforms, including a review of the overall tax structure and addressing inefficiencies in the fuel supply chain.

Motorists and industry players will be watching closely to see whether the tax removal translates into meaningful reductions at the pump.