South African motorists could face a new charge when renewing their vehicle licence discs as government considers changes to how the financially troubled Road Accident Fund (RAF) collects money.
The proposal raises concerns about whether vehicle owners could end up paying more to support a fund already struggling with declining income and growing financial pressure.
Although no additional licence renewal tax has been approved, the proposal has sparked debate over whether motorists should bear the cost of addressing the RAF’s financial problems.
Why South Africa Is Considering a New Car Licence Tax
According to BusinessTech, the RAF’s income fell from R50.8 billion in the 2024/25 financial year to R48.1 billion in 2025/26.
The fund receives most of its money through a levy included in petrol and diesel prices, meaning motorists already contribute whenever they fill up their vehicles.
In 2026, the levy increased by seven cents to R2.25 per litre, its first increase in five years. However, the RAF has proposed raising it further to R3 per litre.
Government is also considering introducing a separate charge when motorists register their vehicles or renew their licence discs.
Transport Minister Barbara Creecy confirmed in July that government was reviewing different ways of funding the RAF.
Electric vehicles are also part of the discussion. Unlike petrol and diesel vehicles, fully electric cars do not contribute through the fuel levy, although their owners can still qualify for RAF compensation following road accidents.
Experts Warn Another Tax May Not Fix the RAF
The Organisation Undoing Tax Abuse (OUTA) has questioned whether changing how motorists contribute will solve the RAF’s financial problems.
OUTA CEO Wayne Duvenage explained that the focus should be on improving the fund’s management rather than introducing different ways of collecting money.
“So, fix the road accident fund, get in professionals to run it. Bring the cost down that way,” Duvenage said.
He also raised concerns about returning to a system where motorists make large annual payments.
According to Moneyweb, Duvenage estimated that annual third-party vehicle insurance could cost motorists around R1,500. This refers to an insurance estimate, not an officially proposed licence renewal tax.
His criticism raises a central concern: whether changing how the RAF collects money will improve its finances without addressing the problems affecting its operations.
Will Motorists Pay More When Renewing Their Licences?
While the RAF has proposed increasing the fuel levy, government is also considering reducing it and introducing other ways for motorists to contribute.
Deputy Transport Minister Mkhuleko Hlengwa told Moneyweb that he supports combining a lower fuel levy with other sources of funding.
This could mean motorists contribute less when purchasing fuel but face a separate charge when renewing their vehicle licences.
However, whether drivers would ultimately pay more or less remains unclear.
No additional licence renewal tax has been approved, and no official amount has been announced.
Government’s review of RAF funding options is expected to conclude during the 2026/27 financial year.
For now, motorists will continue contributing through the existing RAF fuel levy, while questions remain over whether the proposed changes will ease the fund’s financial problems or simply shift the cost onto vehicle owners.
