The Organisation Undoing Tax Abuse (OUTA) has flagged multiple concerns with the Department of Transport’s (DoT’s) plan to introduce a new tax on vehicle owners.
Earlier this year, Transport Minister Barbara Creecy announced that her department was considering a new tax in the form of a fee linked to car registrations and licence disc renewals.
This fee will serve as a new source of revenue for the Road Accident Fund (RAF), which is technically insolvent despite receiving roughly R50 billion per year from fuel levies.
In a recent interview with Cape Talk, OUTA CEO Wayne Duvenage noted that the proposed fee would be the same for all motorists, regardless of the distance travelled.
He argued that this system is not equitable because it does not fairly reflect the different amounts of time motorists spend on the road.
“Having a disc, we all treat it the same. So, if you drive 150km a month and somebody drives 10,000km a month, you’re both going to pay the same,” he said.
“Whereas with the fuel levy, it’s equitable. You are on the road less, less susceptible to accidents, as opposed to somebody who’s on the road a lot of the time and they will pay more.”
Another concern he raised is that a large, annual lump-sum fee will be unaffordable for many South Africans, whereas paying as you go at the pump via a fuel tax is more manageable.
This comes as the DoT is exploring new ways to generate revenue for the RAF. Creecy argued that a new revenue stream was needed to offset the growing adoption of electric vehicles (EVs).
Her reasoning was that, since EVs do not consume fuel, their owners do not pay the RAF fuel levy, and so a new tax is needed to ensure motorists continue to contribute to the Fund.
The RAF itself has raised similar concerns. In its 2025/26 Annual Performance Plan, it identified hybrid and electric vehicles as a key reason for declining fuel sales.
While industry experts have argued that EVs only account for a fraction of the cars on the road and that South Africa is years away from the point where EVs would have a major impact on the RAF, the DoT is pushing ahead with its car licence disc fee plans.
One aspect of the new tax that has yet to be clarified is whether the licence disc fee will apply to all motorists or only to hybrid and EV owners.
If it is applied to all combustion vehicle owners, they will effectively be taxed twice, since they still pay the RAF fuel levy.
Transport department facing backlash over licence disc fee
The DoT’s proposal has been criticised by the Automobile Association of South Africa (AA), which said the idea was laughable.
AA CEO Bobby Ramagwede said it was unreasonable to expect motorists to pay even more to support the failing RAF.
He argued that the DoT should instead work to address the corruption, mismanagement, and overspending at the RAF to address its financial shortcomings.
Furthermore, he dismissed the idea that EV adoption was already at the point where it was threatening the RAF’s bottom line.
“EV adoption is very slow. If one were to compare the rate of EV adoption to the amount of money we’re haemorrhaging from the RAF, it’s abundantly clear that the issue is operational,” he said.
AfriForum has also criticised the proposal, arguing it will unfairly target all motorists and not just those with hybrids and EVs.
“If this proposal goes ahead the way it is currently being presented, owners of fuel-powered vehicles will effectively pay twice,” AfriForum spokesperson Louis Boshoff said.
“They already contribute through the fuel levy, and they would then face an extra charge when renewing their licence discs.”
AfriForum said that motorists should not be forced to pick up the tab for the RAF’s repeated failures.
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