Why your licence disc renewal could soon cost more

A new licence renewal levy could be on the cards for South African motorists as the government looks for new ways to fund the Road Accident Fund (RAF).

This is in part because more drivers are switching to electric vehicles, which don’t pay the fuel levy.

But nothing has been decided yet.

Big shift

Minister of Transport Barbara Creecy has confirmed that her department is researching ways to expand the RAF levy, as more motorists move away from petrol and diesel.

“We have to look at the fact that there’s a big shift to electric vehicles,” Creecy said, in an interview on the Sunday World podcast.

“At the moment, the funding for the road accident fund comes from the fuel levy, but going forward into the future, more people may not be using fossil fuels.”

WHY THE RAF NEEDS A NEW FUNDING MODEL

The RAF is currently funded through a levy on every litre of petrol and diesel sold in South Africa, currently R2.25 a litre.

Electric vehicle owners don’t buy fuel, so they don’t contribute to the RAF.

But they can still claim from the fund if they’re involved in a road accident.

As more motorists switch to electric vehicles, fuel sales – and the money the RAF collects – will fall.

WHAT IS THE LICENCE RENEWAL LEVY?

One option being researched is attaching an RAF levy to vehicle registrations and licence disc renewals.

Creecy has suggested this would ensure all motorists contribute, regardless of what type of vehicle they drive.

However, the RAF’s own proposal was aimed at electric and hybrid vehicles, and didn’t say whether the levy would also apply to petrol and diesel vehicles.

The department has also considered introducing a levy on foreign-registered vehicles entering South Africa.

HAS A DECISION BEEN MADE?

No.

“This is research that we’re doing,” Creecy said.

There’s no confirmed fee, start date or final decision on which motorists would be affected.

In a written reply to Parliament earlier this year, Creecy said the review of the RAF’s funding model is expected to be completed in the 2026/27 financial year.

“As part of the research and assessment, the proposed model must be designed to ensure it is equitable, sustainable, and appropriate for the South African context,” she said.

NO INCREASE TO THE FUEL LEVY

The RAF has also proposed increasing its fuel levy to R3 a litre.

But Creecy has ruled this out, saying she won’t apply to National Treasury for the increase while she’s in Cabinet.

“What we have to do is sort out the mismanagement that has happened at the Road Accident Fund for a long time,” she said.

CRITICISM FROM MOTORISTS’ GROUPS

The idea has drawn criticism.

Bobby Ramagwede is the chief executive of the Automobile Association of South Africa.

He has argued that the RAF’s problems are mainly operational.

In his view, they aren’t a result of the shift to electric vehicles.