The Road Accident Fund and how it is funded through fuel levies
Understanding the Road Accident Fund, and hence the RAF fuel levy, is essential for users of the roads within the Republic of South Africa. In the simplest terms, the Road Accident Fund (RAF) is part of Social Legislation enacted to compensate victims of road crashes and is funded using a levy on petrol and diesel motor fuel sales. The RAF Fuel Levy can be regarded as a compulsory, albeit involuntary, contribution to social security benefits which ensures that a victim of a car crash is not confronted by a “man of straw” should he/she wish to engage the RAF for the purposes of a claim.
An understanding of the RAF Fuel levy is important. However, while its reason for existence is fairly straightforward, having in-depth knowledge of the fund and following the steps to claiming successfully from the RAF usually requires the assistance of specialists in the field.
The following article gives a brief description of what the RAF is without going too deeply into all its intricate details, answers some frequently asked questions, and, concludes with an explanation of how the RAF is funded.
- What is the RAF?
- Can only South Africans claim from the RAF?
- Who is eligible to claim from the RAF?
- Who is excluded from claiming from the RAF?
- Are unlicensed drivers able to claim from the RAF?
- How is the RAF funded?
The Road Accident Fund (RAF) is a South African state insurer, established by statute (Road Accident Fund Act 56 of 1996 (as amended)). It provides liability and collision insurance coverage to ALL South African road users, whether they are citizens of the Republic of South Africa or not, who are involved in a motor vehicle accident within this country’s borders.
Anyone who has been severely injured in a motor vehicle accident and it can be proved that he/she was NOT the sole cause of the accident, has recourse to a claim against the RAF. The RAF compensates for medical expenses, and loss of financial support if a household’s main income provider was killed or severely injured as a result of someone else’s negligence.
Compensation will NOT be paid by the RAF if the claimant cannot prove that someone else was wholly or partially to blame, for the accident.
Drivers, passengers, pedestrians, cyclists and motorcyclists, are eligible to claim from the RAF, providing that:
- they were not wholly responsible for the accident
- the person causing the accident was the driver of a vehicle propelled by either petrol or diesel.
Interestingly, a person driving without a valid driver’s licence can claim compensation from the RAF if such a person can show that someone else was at fault.
The main income received by the Road Accident Fund is a levy that is based on fuel sales known as the RAF Fuel Levy. The RAF annually requests an increase in the RAF Fuel Levy but the full extent of the RAF Fuel Levy as requested is seldom granted; however, that said the RAF Fuel Levy has nevertheless increased by 425% since January 2008. The South African Revenue Service administers the collection of the fuel levy.
The two main variables that determine the income of the RAF are; 1) the volumes of petrol and diesel sold per annum and 2) the rate of the levy.
RAF Fuel Levy values (as at June 2022)
The general fuel levy stands at R3.85 per litre of petrol and R3.70 per litre of diesel, while the RAF levy is currently R2.18 per litre of petrol and diesel. To support consumers and the economic recovery, no increases will be made to the general fuel levy on petrol and diesel for 2022/23, providing tax relief of R3.5-billion.
In combination with the zero increase in RAF levy, these changes will ensure that fuel taxes as a percentage of the price of fuel are below 40%.
The last time that the fuel price was not increased due to a change in either the general fuel levy or the RAF levy was in 1990.
Trying to make sense of all the elements that make up the fuel price can be quite daunting. There are up to 13 different charges, depending on the type of fuel and where you happen to live. But, in summary, the RAF is funded via a national fuel levy (in essence a form of insurance premiums) on motor vehicle fuel (both petrol and diesel) and was created with the sole purpose of providing the widest possible cover for road crash victims, injured or killed, within the borders of South Africa.
There are currently talks around scrapping the RAF levy, requiring road users to secure their own compulsory insurance. Private insurance companies are expected to join the race to provide the cheapest comprehensive “personal injury cover” should this approach find favour with Government. The answer would probably be a hybrid system as many road users will not be in a financial position to afford personal insurance.
Another interesting factor is the introduction of electric powered vehicles. These would have to be brought into the legislative fray which would require the legislative changes.
