How much tax you really pay to own and drive a car in South Africa

A staggering amount of the money you spend on a car goes to tax in South Africa.

On top of this, the money that you do spend on your car is likely coming from a salary that has already been subjected to income tax.

The result is that South Africans are giving substantial amounts of money to the government each month for not only earning a salary, but using that salary on a vehicle.

How much tax you pay

To provide an example of how much tax you pay to own and drive a car, we will use the example of a 35-year-old person earning R35,000 per month.

The first tax they will pay is income tax – which in this case is R6,841 per month. Before anyone can spend their salary on a car, they must first pay a chunk of it over to SARS.

This leaves our individual with R28,159 to cover all their expenses for the month – including their car payments.

The next set of taxes are on the car you buy, and in this example our individual will be purchasing a new Toyota Hilux Xtra Cab that retails for R471,000.

Calculations from Naamsa have shown that the tax payable on a new vehicle in South Africa ranges from around 18% on entry-level vehicles to 42% for premium vehicles.

This includes:

• VAT – 15%
• Ad Valorem Tax – Calculated on a per-vehicle basis
• CO2 Tax – 2.5%-6%
• Import Duty on Vehicles – 25%
• Import Duty on Components – 20%

Naamsa stated that the Toyota Hilux “could be in the order of 30% – considering VAT of 15%, Ad valorem duty based on a formula of 9%, and specific portion of the import duty of 25%”.

This comes to around R141,000 in taxes, out of the total price of R471,500.

Fuel and VAT

Unfortunately, the taxes do not stop there.

Every time you put petrol or diesel in your car or bakkie, you pay a range of taxes to the government.

These taxes include the fuel levy, Road Accident Fund levy, and more.

A breakdown of the taxes you pay for a litre 95 petrol, at inland pricing, is shown below.

• Fuel Levy – R3.93 per litre
• Road Accident Fund Levy – R2.18 per litre
• Customs and Excise – 4 cents per litre
• Demand-Side Management Levy – 10 cents per litre
• Other Levies – 1 cent per litre

This equals R6.26 per litre of 95 petrol.

For a driver filling up a 50-litre tank, you pay R313 in taxes each time.

Rounding off the tax burden is VAT (Value Added Tax), which you pay on a variety of products and services linked to car ownership.

VAT is 15%, and you pay this on items like your monthly vehicle insurance premium or taking your car for a wash.

Taxes at a glance

The bullet points below provide an overview of the taxes detailed in this article.

• Income tax on a R35,000 salary – R6,841
• Tax on New Toyota Hilux Xtra Cab price – R141,000
• Taxes paid on a 50-litre tank of petrol – R313
• VAT charges – 15%