Scrapping the Road Accident Fund to save R2.25 on petrol is a mistake – OUTA

The Road Accident Fund (RAF) imposes a R2.25 per litre levy on petrol and diesel in South Africa, but scrapping it to reduce fuel prices is a short-sighted solution.

This is the view of the Organisation Undoing Tax Abuse (OUTA), which warned that getting rid of the RAF would impose a different burden on motorists.

OUTA CEO Wayne Duvenage recently spoke in an interview on 702 about the growing calls to scrap the RAF, a state-owned entity that has become a major source of frustration for taxpayers over the years.

He said that getting rid of the RAF levy would necessitate a shift to either a mandatory third-party insurance model or some sort of hybrid system, which would be unaffordable for many South Africans.

Duvenage pointed out that the cost of renewing a vehicle licence disc is already prohibitively expensive for low-income earners.

Moving away from the current system where motorists pay a little bit more every time they refuel to a new model that requires a lump sum each year may therefore be very difficult for many motorists to manage.

“When people are broke in this situation, you’ll have people driving around with no insurance and victims trying to claim,” said the CEO.

“That’s why the government moved away from a third-party disc, and many countries around the world have gone to the fuel levy.”

That being said, Duvenage also believes the current RAF levy of R2.25 per litre is too high and could be cut to R1.25 per litre, provided the RAF is properly managed.

“If you go back to 2007/08, the RAF was raising about R8 million a year. It was washing its own face, covering its costs. Back then, it was about R0.47 per litre,” he said.

“What they’ve done is just mismanage the RAF completely, pushed massive increases well above inflation, and have just lost control.”

He said the solution was not to punish motorists by making them pick up the tab for the RAF’s poor financial decisions; rather, the RAF should appoint new professionals to run it while cutting costs.

“R2.25 is too high. We believe that if the Road Accident Fund were managed well and properly, you’d be paying a rand less than that anyway,” he said.

This comes only days after the RAF published its annual report for the 2025/26 financial year, which includes a request to hike the levy to R3 per litre, an increase of 33%.

Scrapping the RAF levy would be nice – but the consequences are too high

OUTA said that it wasn’t necessarily against the idea of a new hybrid model in South Africa, but that it was unlikely to raise the amounts required.

Duvenage said he’d love to see the RAF levy scrapped entirely. However, the question remains of what it would be replaced by.

“You’re not going to raise R50 billion a year through a third-party levy. It’s just not going to be affordable to people,” he said.

“But what do you replace [the RAF levy] with, and how do you manage the Road Accident Fund? That’s what we are saying.”

The RAF’s request to raise fuel taxes only days after petrol and diesel prices were hiked past R30 per litre has drawn the ire of other organisations, including the Automobile Association (AA).

“Adding insult to injury is the Road Accident Fund, which has the audacity to include a request to increase the RAF Levy for both petrol and diesel locally,” it said.

The RAF justified the increase, arguing that the levy has not kept up with inflation and that it is losing revenue as a result.

It also argued that the Iran war has led to a decline in fuel sales, further hurting its revenue.

“Calling for R3 per litre is what the AA terms as consumer tone-deafness, ignoring completely an embattled consumer facing rising inflationary pressure off the back of interest rates, fuel costs and basics like groceries and school fees increasing almost monthly,” said the association.

“The AA as a matter of urgency calls for the opposite. We remind government that it is the very taxpayer being stifled that pays its salaries, and as a consumer body here for almost a century the AA’s call is rigid: abolish the RAF levy immediately, find more appropriate ways to solve for the RAF’s mandate and allow the embattled consumer to continue contributing meaningfully to the economy.”