33% petrol tax hike coming to South Africa

Just as South African motorists have had to make peace with record-high petrol prices, the Road Accident Fund (RAF) published its latest annual report, which proposes increasing the RAF levy on petrol and diesel.

Following a 7 cent per litre increase in April, local motorists pay R2.25 of every litre of fuel bought in the country to cover this levy, which the RAF wants to raise to R3 per litre, an increase of 33.33%.

In its 2025/26 annual report, the fund claims to be “under-capitalised”, with its liabilities exceeding its assets by R439.5 billion and blames reduced fuel sales for impacting its current funding model.

It said rising fuel prices due to the Middle East conflict affected fuel sales and ultimately resulted in a loss of levy revenue.

The conflict between the US and Iran in the Middle East has driven global oil price increases and, in turn, significant fuel price shocks, forcing households to cut down on fuel spending, which starved the RAF.

The fund collected R47.8 billion in revenue in 2025/26, which was 4.6% lower than the R50.1 billion it recorded in the year before, despite the levy being R0.07 less per litre.

To counter this and steady the ship, the RAF management said it would continue to explore ways to stabilise its insolvency position, including a proposed increase in the RAF levy on fuel to the National Treasury.

Its proposal included requesting a R0.75-per-litre fuel levy increase to R3.00, alongside additional capital support.

According to the RAF, fuel levies make up 99.4% of its total revenue, and several factors have impacted its performance over the years, including keeping the levy at R2.18 per litre from 2021/22 to 2025/26.

Alongside raising the levy, RAF management is exploring longer-term legislative reforms, including converting settled claims that are ready for payment from immediate lump-sum settlements into periodic payments.

It said that by smoothing large cash outflows over time, annuity payments would reduce its immediate liquidity pressure.

South Africa doesn’t need the Road Accident Fund

Several industry stakeholders have called for the  RAF to be scrapped, including Automobile Association (AA) of South Africa CEO Bobby Ramagwede.

He proposed a compulsory third-party insurance system after the Department of Transport (DoT) proposed introducing a new licence disc tax to offset potential revenue losses due to the popularity of electric vehicles (EVs).

Speaking to Cape Talk, Ramagwede suggested that the idea of a new fee on vehicle licence disc renewals was laughable.

“It’s no secret. The RAF is embattled and maladministered. In fact, it collects more money than it disburses,” he said.

“Surely, by fixing its efficiencies and its operations, there’d be no reason for us to be collecting a further fee.”

Ramagwede said the department’s reasoning that EV adoption is reducing RAF’s fuel levy revenue is not good enough to introduce a new tax, especially since the fund has been mismanaged.

At the time, the Democratic Alliance (DA) also proposed that a new system should replace the RAF, noting that the party opposes the new vehicle licence disc tax on motorists.

The DA’s spokesperson on Transport, Dr Chris Hunsinger, said the party is ramping up its fight against Transport Minister Barbara Creecy’s plans to make motorists pay even more to prop up the failing RAF.

“Instead of fixing the RAF’s long-standing failures, the ANC is once again asking hardworking South Africans to pay more,” he declared.

The party argued that the RAF is an unsustainable burden on taxpayers that should be scrapped instead.

“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,” said Hunsinger.