New car licence disc tax could be coming for South African motorists

Cape Town – South African motorists could face an additional charge when renewing their vehicle licence discs as the government considers a new funding mechanism for the financially strained Road Accident Fund (RAF).

According to BusinessTech, the RAF is proposing an expansion of its revenue base, including attaching a levy to vehicle registration and licence renewals.

The proposal is aimed particularly at addressing the growing number of electric and hybrid vehicles, which do not contribute to the RAF through the existing fuel levy.

New RAF charge under consideration

The RAF currently receives almost all of its revenue from a levy charged on every litre of petrol and diesel sold in South Africa. The levy was increased from R2.18 to R2.25 per litre in 2026 after remaining unchanged for five years.

However, the RAF says the increase has not been sufficient. Its 2025/26 annual report showed that total revenue fell by 5% to R48.1 billion, from R50.8 billion in the previous financial year. The fund has consequently proposed that the levy could eventually rise to up to R3 per litre.

BusinessTech reported that the RAF is also investigating the possibility of applying its levy to motor vehicle registration and licence renewals, as well as foreign-registered vehicles entering South Africa. The measure would ensure that motorists who use roads but do not buy petrol or diesel also contribute towards the fund.

The issue is not entirely new. Moneyweb reported in May that Transport Minister Barbara Creecy had confirmed that her department was researching a vehicle-owner contributory scheme that could see motorists pay a separate amount when buying and renewing vehicle licences.

Creecy said the department was concerned about the sustainability of the RAF’s current funding model, particularly as the number of electric vehicles increases.

Government says funding model needs to change

The proposal comes as pressure mounts on the RAF’s finances. Parliament’s Portfolio Committee on Transport said this week that it was concerned about the fund’s liquidity challenges.

According to Parliament of South Africa, the RAF told MPs that it was paying out about R25 billion a month while receiving only R4 billion into its coffers.

The fund has therefore been looking at alternative revenue streams instead of relying almost entirely on the fuel levy.

Creecy has previously indicated that there is merit in introducing a separate mandatory RAF fee linked to vehicle registration and annual licence-disc renewals. The proposal is intended to create a funding mechanism that covers all road users, including owners of electric vehicles.

Concerns over RAF management

The proposal has, however, attracted criticism, with opponents arguing that government should first address the RAF’s management and governance problems before asking motorists for additional money.

SABC News reported in July that the Public Servants Association criticised the proposed vehicle-linked fee.

PSA spokesperson Reuben Maleka said: “You cannot address financial mismanagement by bringing more money.”

The criticism comes against a backdrop of longstanding governance problems at the RAF. The government previously dissolved the fund’s board following concerns over governance and operational failures.

Meanwhile, Moneyweb’s latest report said Deputy Transport Minister Mkhuleko Hlengwa favours a hybrid funding model, under which the existing fuel levy could be reduced rather than simply replaced, while additional sources of revenue are introduced.

For now, the proposed licence-renewal charge is not yet a confirmed new fee that motorists must pay. It remains part of the government’s broader review of how the RAF should be funded, with the final structure and amount still to be determined.

The existing government process for renewing vehicle licences remains unchanged: motorists must renew their licences annually and pay the applicable licence fee, with late renewals attracting penalties and arrears.