South African motorists could soon face additional costs when renewing their vehicle licence discs as government explores new ways to fund the Road Accident Fund (RAF) in an era of growing electric vehicle adoption.
Transport Minister Barbara Creecy recently indicated that her department is evaluating the possibility of introducing an extra charge linked to annual vehicle licence renewals. The proposal forms part of broader discussions on how to secure long-term funding for the RAF, which currently relies heavily on fuel levy revenue.
The RAF provides compensation to people who suffer injuries, loss of income or other damages resulting from road accidents. However, as electric vehicles become more common and fuel consumption gradually declines, policymakers are concerned that one of the fund’s primary revenue sources could weaken over time.
Concerns raised over RAF management and funding model
The proposal has already attracted criticism from industry stakeholders who argue that the RAF’s financial challenges stem more from operational inefficiencies than declining fuel levy income.
Automobile Association of South Africa CEO Bobby Ramagwede questioned whether introducing another charge for motorists was justified while the RAF continues to face allegations of poor administration and financial mismanagement.
According to Ramagwede, the current pace of electric vehicle adoption in South Africa remains relatively slow and is unlikely to have a significant impact on fuel levy collections in the near future.
He argued that improving operational efficiency within the RAF could reduce financial pressures without placing additional burdens on vehicle owners.
The RAF has faced repeated scrutiny over the years regarding governance challenges, administrative delays and concerns about how funds are managed. Critics maintain that addressing these issues should take priority before considering new levies or taxes.
Alternative funding options being explored
Transport Department spokesperson Collen Msibi said government is conducting a detailed gap analysis and business case assessment to examine future funding options.
The review will consider policy design, legal frameworks, operational requirements and the relationship between the proposed Road Accident Benefit Scheme (RABS) and third-party insurance models.
One alternative frequently raised by industry experts is compulsory third-party insurance, a system used in many countries to provide compensation for road accident victims.
Beyond the RAF, policymakers are also examining the broader impact of electric vehicles on South Africa’s tax base.
Electric vehicle owners do not contribute directly to the General Fuel Levy (GFL), which has become one of the country’s most significant sources of tax revenue. The levy contributes to national government funding and supports a wide range of public expenditure programmes.
As vehicle technology evolves, experts warn that fuel-based taxation models may become increasingly difficult to sustain.
Some transport analysts have proposed a distance-based road usage fee as a long-term alternative. Under this model, motorists would report their annual mileage when renewing licence discs and pay charges based on how much they use public roads.
Supporters argue that a kilometre-based system would apply equally to petrol, diesel, hybrid and electric vehicles while more accurately reflecting road usage.
For now, government has not announced any final decision. However, the debate highlights the growing challenge of adapting South Africa’s transport funding model to accommodate the transition towards cleaner vehicle technologies.
Source: Department of Transport, Automobile Association of South Africa (AA), MyBroadband