Fuel price WARNING: AA demands RAF levy be scrapped

The Automobile Association (AA) has called on government to scrap the Road Accident Fund (RAF) fuel levy, rejecting a proposal to increase it from R2.25 to R3 a litre.

The association made the demand in an open letter to Finance Minister Enoch Godongwana on Thursday, 8 October, following another sharp increase in petrol and diesel prices.

The RAF’s proposal to raise the levy comes as South African motorists face the prospect of further fuel price increases in November.

AA chief executive Bobby Ramagwede accused the fund of placing additional pressure on consumers already struggling with rising living costs.

AA SLAMS PROPOSED RAF FUEL LEVY INCREASE

The RAF currently receives R2.25 from every litre of petrol and diesel sold in South Africa.

Its 2025/26 annual report includes a request to raise that contribution to R3 a litre.

The proposed increase would add another 75 cents to the existing levy if government approves it.

However, the AA wants government to abolish the levy and find another way to fund compensation for road accident victims.

Ramagwede criticised the proposal, pointing out that the RAF collected R47.8 billion in net levy revenue during the past financial year.

“Gouging the consumer is not the answer,” he said.

The AA also questioned why motorists should contribute more when the fund continues to face financial difficulties.

AA DEMANDS ANOTHER R3 CUT IN FUEL TAXES

The association wants National Treasury to reduce the general fuel levy by a further R3 a litre before November’s fuel price adjustment.

This demand is separate from its call to abolish the RAF levy.

The AA argued that government could finance the reduction by cutting wasteful expenditure rather than increasing borrowing.

“Recover it from waste,” Ramagwede said.

The association also wants the Department of Mineral and Petroleum Resources to review South Africa’s basic fuel price formula.

It has called on the Central Energy Fund (CEF) to produce a plan within 90 days to rebuild strategic fuel reserves and clarify PetroSA’s future.

According to the AA, fuel-related taxes account for approximately 25% of the price motorists pay at the pumps.

GOVERNMENT WEIGHS CHANGES TO RAF FUNDING

The demand comes as government considers reducing its reliance on fuel levies to finance the RAF.

According to a report, Deputy Transport Minister Mkhuleko Hlengwa favours a hybrid funding model that would reduce the levy while introducing alternative revenue streams.

The options under consideration include compulsory third-party vehicle insurance, private-sector contributions and travel insurance requirements for foreign visitors.

Government is also reviewing the Road Accident Benefit Scheme Bill, which proposes changes to how road accident victims receive compensation.

However, the Organisation Undoing Tax Abuse (Outa) has questioned whether replacing the fuel levy with other funding mechanisms would address the RAF’s financial problems.

No decision has been announced on reducing or abolishing the levy.

NOVEMBER PETROL PRICE INCREASE LOOMS

The dispute follows another warning that motorists could face further increases next month.

As The South African reported on Thursday, 8 October, early CEF data points to a possible R4.58-a-litre increase for 95 petrol in November.

The projections followed Wednesday’s fuel price adjustment, which saw 95 petrol rise by R3.33 a litre and pushed inland petrol above R30.

Investec chief economist Annabel Bishop has also warned that sustained fuel price increases could push consumer inflation above 5%.

The AA says rising transport costs affect more than motorists, with commuters and businesses also facing higher expenses.

Ramagwede warned that low-income workers were particularly vulnerable as taxi, bus and e-hailing operators passed rising fuel costs on to passengers.

The latest demands now place pressure on National Treasury to consider relief before the next adjustment.

However, the November figures remain preliminary, and government has not approved any further fuel levy reduction.

The Department of Mineral and Petroleum Resources is expected to announce the final November fuel price adjustment towards the end of October, with the new prices taking effect on Wednesday, 4 November.