Taken for a ride: SA car ownership one of most ‘taxing’ in the world

Travelling may broaden the mind, but it can be painful for petrolheads who will check out what’s on offer locally and the sticker prices attached to windscreens of new and used vehicles alike.

Inevitably, as a South African, you come away feeling cheated.

The truth is that for generations, the South African taxman has been milking the car industry, and it’s the car buyer who ultimately carries the cost. 

Sweet deal for taxman

Sitting over breakfast and hearing a cheerful voice announcing that a  base model Mustang 2.3-litre 10AT can be mine for a mere R833 900 is enough to make me choke on my Post Toasties.

But, let’s be fair. That is the ‘inclusive price’-inclusive that is of VAT at 15%, which brings the price ‘down’ to just R725 130.  It’s a sweet deal for the taxman who gets a whopping R108 770 just for you signing on the dotted line. 

The Mustang 2.3-litre 10AT. Image: ford.co.za

So where does the money go?

So just where does the money go in South Africa? The truth is that up to 42% of the cost of a car goes straight to the fiscus. The list of taxes is a delight for any revenue collector. They include:

• Import duties
• Ad valorem tax
• Vat
• CO² tax.

Let’s not forget that added to this burden is the money required to keep the car on the road. They are taxes, or include tax, and are:

• Registration and licencing fees
• Tax for getting rid of your old tyres. 
• Toll roads, which as much as SANRAL denies it, is a tax on which additional tax (VAT) is payable.

The true cost of fuel

What’s missing from the short-list above is fuel. That’s because this is a discussion point all on its own.

In April 2020, it was stated by the Outa lobby group that nearly 70% of our fuel price is made up of taxes and levies. Besides the basic fuel price, which is impacted on by the rand/dollar exchange rate and the oil price, which accounts for about 30% of the fuel costs for 95 octane fuel, there are several other taxable elements.

Outa lists these as:

• The fuel levy
• Road Accident Fund
• Wholesale margin
• Retail margin
• Transport and storage charges.

In April this year, this meant that R9.48 of every litre sold went in tax in some form. This equated to  68% of the fuel price.

And the cost of that Mustang in other countries?

This will vary from country to country and depend on tax regimes and market size.

But, on a recent trip to New Zealand (pre-COVID-19), a small market on the edge of the southern hemisphere,  the price of that Mustang was R768 324 (NZ$ 67 900).

That may be higher than the South African cost, but is calculated at a rate of R11.32 to the NZ$ — the going rate today (2 August 2020).

Happy motoring!