The Reality of SA’s Proposed New Car Tax
For decades, South African motorists have treated annual licence disc renewals as a routine, if slightly painful, administrative chore. But if a new proposal currently being discussed by the Department of Transport gains traction, your next trip to the licensing department could come with an extra charge.
Transport Minister Barbara Creecy said earlier this year that her department is taking a fresh look at how the Road Accident Fund (RAF) raises funds. One idea is a standalone charge, payable at vehicle registration or licence renewal, that would also apply to electric vehicle owners.
Nothing has been decided. According to Creecy, her department and the RAF have begun a review of the fund's financing, guided by a business case, and the findings will be made public once that work is finished. As of early October 2026, no preferred option has been announced, nor has any amount been proposed.
The pump-based model is under strain
Most RAF income comes from a per-litre charge on petrol and diesel. That charge stayed at R2.18 for five years and, according to TopAuto, raised roughly R50 billion a year.The levy rose by 7c to R2.25 on 1 April 2026, as announced in the Budget Review, in line with inflation. OUTA puts annual levy income a little lower, at more than R45 billion, so the real figure likely sits between R45 billion and R50 billion.
Electric and plug-in hybrid cars buy little or no fuel, so their owners contribute little or nothing while sharing the same roads and crash risk. A registration-linked charge is one way to reach them.
A bigger problem than EVs
The fund's financial trouble is far larger than the EV question. OUTA says the RAF's long-term liabilities stand at R387.4 billion and are expected to reach R426.2 billion by 2028/29. According to a RAF report, between 2022 and 2025, the levy raised R195 billion, of which R185 billion was paid out in claims. PwC has described the fund as running an annual deficit and being technically insolvent. The Auditor-General also took issue with the RAF's 2024/25 accounts, because the fund applied an accounting framework that departs from the mandated GRAP standard.
EVs are a reason to rethink the model, but they don't explain a gap of this size.
Would petrol drivers pay twice?
If a registration fee replaced part of the fuel levy, the trade-off would be easy to debate. A flat annual charge is simpler to collect and could ease costs at the pump.
Nothing announced so far suggests that. Treasury's budget review sets the general fuel levy on petrol at R4.10 a litre from April, on top of the RAF levy, and fuel taxes now make up around a third of the pump price, according to Daily Investor's reading of the budget. If a licence fee were added without cutting either, petrol drivers would pay at the filling station and again at the licensing counter.
The accountability argument
OUTA CEO Wayne Duvenage has argued that raising the levy without fixing the RAF's structural failures shifts the burden onto motorists while liabilities continue to grow. The same objection is likely to be raised against any licence-linked fee.
The counter-argument is that the RAF has legal duties to crash victims, and those claims must be funded somehow. A model that rests entirely on petrol and diesel sales is hard to sustain as the vehicle fleet changes.
What happens next
Any preferred model would still have to pass through policy, legislative and public comment stages before becoming law. The questions to watch are whether the business case is published, whether a licence fee would replace or add to the fuel levy, whether petrol, hybrid and electric owners would pay the same amount, and whether any new revenue comes with fixes to how the RAF is run.
