South Africa should scrap the litre-based Road Accident Fund (RAF) Levy and General Fuel Levy (GFL) and replace them with a new per-kilometre tax based on vehicle weight and distance covered.
This is the opinion of Driving.co.za managing director Rob Handfield-Jones, who argues that this new solution would make fuel taxes fairer while also addressing the growing adoption of new energy vehicles (NEVs).
According to the National Automobile Association of South Africa (Naamsa), a total of 11,952 NEVs have been sold in the first nine months of 2025, a year-on-year increase of 9%.
In particular, plug-in hybrid (PHEV) sales have shot up over the last year, increasing 274% from 477 to 1,784 sales.
These cars are capable of fully electric driving and can theoretically be driven for months without the need to refuel.
As NEVs become more widespread, the government’s GFL revenue will decline.
As the fourth-largest source of general tax revenue for the state, this could create a significant budget shortfall for South Africa.
While Electric vehicle (EV) drivers pay 15% VAT on the electricity they use to charge their batteries, the effective cost of R15 per R100 is roughly half the contribution of the GFL and RAF Levy, according to MyBroadband.
Handfield-Jones also highlighted how EV and PHEV owners can use self-generated electricity from solar panels to power their cars.
“I don’t pay any fuel tax, and nor do I pay VAT on electricity, let alone VAT on the surplus electricity I’d be using to charge my car if I still used the grid,” he said.
“If local takeup of EVs reaches the exponential curve seen in places like Norway, alongside mass adoption of rooftop PV, fuel tax and VAT revenue could crash quite dramatically.”
He believes that South Africa should scrap the RAF Levy, which currently adds R2.18 to every litre of petrol.
Instead, insurance, including third-party cover for injuries, should be mandatory for all vehicles.
“It should be a private requirement as it is in other countries, not an ineffective state monopoly,” he said.
The RAF receives approximately R48 billion annually but is technically bankrupt and has undisclosed liabilities of R500 billion.
It is currently being investigated by Parliament’s Standing Committee on Public Accounts (SCOPA) for severe governance failures.
Former CEO Collins Letsoalo was issued a summons to appear before SCOPA on 25 November, which he failed to answer.
Instead he appeared on the SABC’s Face The Nation, where he stated that he would not attend the “kangaroo court.”
This could potentially lead to SCOPA laying criminal charges against Letsoalo over his refusal to appear before it and ignoring an official summons.
Letsoalo also disputed the previous reports that he had dropped off the radar.
This comes after the sheriff delivering the summons found the address Collins used to communicate with parliament to be abandoned with no furniture and an overgrown lawn.
Per-litre vs per-kilometre
Handfield-Jones expressed doubt that the government would ever give up the GFL or ringfence it for road repairs and maintenance, since it is an easy-to-collect and lucrative source of revenue.
However, he argued that the GFL needs to be revamped from a per-litre to per-kilometre tax, which would also address the rapid adoption of NEVs.
“The government might do well to mitigate it before it becomes suddenly catastrophic by moving to an entirely new vehicle tax regime which is no longer linked to fuel use,” he said.
“Since one is required to state the mileage of a vehicle at every yearly licence renewal, my solution would be to charge a per-kilometre tax every year in arrears.”
A per-km tax, also known as a distance-based road user charge (RUC), is currently being trailed in countries like Australia and the United States.
Handfield-Jones explained the per-km tax would be a great example of government applying its often-punted “user pay” principle.
“Let them put their money where their mouth is and actually tax road users according to how much they drive in what type of vehicle, not what energy source they use,” he said.
“Declared mileage could easily be recorded on e-Natis and spot-checked at the roadside by traffic officers.”
He added that enforcement would be simple, and that failure to declare the correct mileage would be considered a form of tax evasion.
Furthermore, SARS existing enforcement powers would be able to combat this behaviour, claimed Handfield-Jones.
The law could also be amended so that modern vehicles with connectivity functions could report their mileage to the tax authorities.
Damage escalation for heavier vehicles
Handfield-Jones explained that the current fuel levy collections suggest that an average of R6,923 is paid per car per year.
However, a per-km tax would could include a built-in damage escalator based on weight, as heavier vehicles cause more damage to the road.
“A 56-tonne rig does a lot more pavement damage than a motorcycle for the same mileage,” Handfield-Jones explained.
“I estimate cars [for personal transport] would probably pay about R5,400 per year. Working on a basis of 15,000km travelled per year, that’s 36 cents per kilometre.”
Even if an additional 5c per km surcharge was ringfenced for road maintenance, the total charge of 41c per km or R513 per month would be nearly the same amount as the currently paid amount in fuel tax.
“Perhaps the amount could even be collected monthly rather than requiring an annual lump sum payment, with an adjustment at year’s end, much like the PAYE system,” Handfield-Jones said.
Loading ...
