Transport Minister Barbara Creecy has revealed that her department is planning to tax South African motorists even more to support the Road Accident Fund (RAF), which has drawn fierce criticism.
The new tax is a proposed mandatory fee attached to annual vehicle licence disc renewals and vehicle registrations.
One reason for introducing the new fee is the growing adoption of electric vehicles (EVs) in South Africa.
Because the RAF is funded through the Road Accident Fund Levy – a tax placed on every litre of petrol and diesel sold – EV owners do not contribute towards its funding.
As a result, RAF funding is expected to decline as EV adoption rates increase, which is why the minister proposed a transitional levy to ensure that the RAF remains operational.
The Department of Transport sees a vehicle-linked fee as a transitional levy to capture revenue from all road users, and not only those who pay for fuel.
The Road Accident Fund is a state-owned entity responsible for the compensation of victims who have suffered injuries or a loss of income as a result of vehicle-related accidents in South Africa.
It often draws sharp criticism, given frequent accusations of organisational corruption, and the fact that it is technically insolvent despite receiving R45 billion per year from fuel taxes.
As a result, the proposed additional tax on all local motorists has drawn further ire from the Democratic Alliance (DA), among others.
The party’s Spokesperson on Transport, Dr Chris Hunsinger, explained that it is gearing up to fight the proposed mandatory fee.
“The Democratic Alliance is ramping up our fight against plans being considered by Transport Minister Barbara Creecy to make motorists pay even more to prop up the failing Road Accident Fund,” he said.
South Africans are already facing higher fuel prices, inflation, and increased financial pressure, meaning additional tax would further pressure households.
“Instead of fixing the RAF’s long-standing failures, the ANC is once again asking hardworking South Africans to pay more,” Hunsinger declared.
Opposition to new tax
The Democratic Alliance revealed that it is already engaging the transport minister regarding her plans to replace the RAF through legislative amendment, and is currently awaiting a meeting.
“The RAF is not in crisis because motorists are not paying enough, the RAF is in crisis because years of mismanagement, corruption, waste and poor governance have left it financially crippled,” noted Hunsinger.
“South Africans should not be forced to foot the bill for the government’s failures.”
For years, the party has argued that the fund has become an unsustainable burden on South African motorists and taxpayers, as every litre of fuel purchased already includes funding for the RAF.
Creecy has reportedly confirmed that while the additional fee attached to annual licence-disc renewals is being considered, the government is searching for alternative funding mechanisms for the RAF.
“While the minister says this remains under consideration, the fact that such proposals are being discussed should concern every motorist in South Africa,” said Hunsinger.
He added that the DA believes a solution should not include the creation of new taxes, fees, and levies.
“The solution is to fundamentally reform and ultimately replace the RAF with a sustainable, efficient and affordable system that delivers support to accident victims without continuously demanding more money from the public,” he said.
He argued that every rand extracted from South African motorists through additional taxes and fees is money that cannot be spent on necessities like groceries, school fees, transport or supporting a family.
“South Africans should not be punished for the government’s inability to manage the RAF,” Hunsinger concluded.
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