Petrol tax going up for the first time in 5 years in South Africa

The government plans to increase the Road Accident Fund (RAF) Levy for the first time in five years.

The levy, which adds to the cost of every litre of fuel sold in South Africa, has been frozen since 2021, as the government previously implemented relief measures to assist households in the wake of the Covid-19 pandemic.

However, during the 2026 Budget Speech, Finance Minister Enoch Godongwana announced that the RAF Levy will be adjusted to account for inflation this year.

This comes at a time when the RAF is being heavily scrutinised for severe mismanagement, irregularities, and inefficiencies, following a inquiry by the Standing Committee on Public Accounts (SCOPA).

SCOPA began probing the state-owned entity after it received an adverse audit opinion for the 2024/2025 financial year.

The RAF receives its funding from the RAF Levy, a tax that adds R2.18 to every litre of petrol and diesel in South Africa.

The levy, which generates approximately R50 billion per year for the RAF, has been sitting at R2.18 for the last five years, but it will now be raised by 7c per litre, according to Godongwana.

The state insurance agency warned in its most recent report that the current fuel levy is not sustainable for the long-term settlement of claims or the fund’s overall sustainability. 

The RAF paid out R42.6 billion in claims over the last financial year, and had R10.4 billion in unpaid claims.

Between 2022 and 2025, the RAF has generated R195 billion in fuel levies, of which R185 billion has been paid out in claims.

The fund is intended to compensate victims injured in road-related accidents in South Africa, including medical expenses, loss of income, funeral costs, general damages, and future medical and rehabilitation expenses.

Since 2000, the RAF Levy’s contribution has increased by 1,400% for petrol and 2,106% for diesel.

The planned increase will raise the levy to R2.25 per litre for both petrol and diesel.

Minister Godongwana said that the increases to some taxes are unavoidable.

The RAF’s poor audit opinion for the 2024/2025 financial year was caused by the RAF using an accounting standard that “fundamentally differs from the prescribed GRAP standard,” according to the Auditor General of South Africa.

This meant that the entity under-reported its liabilities and expenditures. It also failed to record irregular expenditure due to inadequate systems to detect and disclose it.

SCOPA is currently finalizing its probe into the RAF and its governance failures.

Petrol tax paying for government mismanagement

SCOPA chair Sengezo Zibi claimed that the inquiry found far-reaching examples of governance failures at the RAF.

“Dysfunction is the right way to describe it,” he said.

The RAF board recently placed its acting CEO, CFO, Chief Governance Officer and the Head of the CEO’s office on precautionary suspension.

One of the biggest irregularities flagged by SCOPA was that the entity changed its accounting policy.

This affected 50,000 claimants and was implemented without any recorded executive meeting or board approval.

Suppliers were also consulted and preparations were made before the RAF’s governance had even discussed the matter.

Additionally, SCOPA found that the RAF outsourced nearly R1 billion in procurement to two external companies, each awarded R500 million, without examining invoices.

This allowed suppliers to procure from relatives and friends at allegedly inflated prices.