2024 budget brings major cuts in vehicle taxes |08 November 2023

Ms Adeline and PS Lebon during the press conference

•           Excise and environmental levies slashed for twin cabs and hybrids

The Trade department within the Ministry of Finance, National Planning & Trade has elaborated on the recently announced reduction in excise tax and environmental levy for pick-up twin-cab and vehicle tax structure, in line with the 2024 budget delivered last Friday by Minister Naadir Hassan.

In a press conference at the department’s headquarters yesterday afternoon, the principal secretary for trade, Francis Lebon, and senior trade officer, Angelique Adeline, explained that effective January 2024, used quarter-panels – the sections of a vehicle's bodywork – will retain the current 190% excise tax.

However, new quarter-panels will enjoy a significant tax reduction to 90%.

For twin-cab trucks, there is good news as well. The excise tax on these vehicles, which previously ranged from 50% to 100% based on the engine size (cylinder capacity), will be lowered to 40%. Additionally, the environmental levy on twin cabs will see a steep decrease from the current R70,000-R175,000 to R40,000  with the exact amount varying according to the engine size.

In another significant update, hybrid vehicles will undergo a reclassification. Hybrids with a battery capacity of 200 volts or higher will be categorised as full hybrids, benefitting from reduced excise taxes and environmental levies. For vehicles with an engine size up to 1600 CC, the excise tax will be cut from 12.5% down to 10%. The environmental levy will also remain zero rupees.

For vehicles with an engine size over 1600 CC but not exceeding 2000 CC, there will be a tax cut with the excise tax dropping from 75% to 50%, and the environmental levy being halved from R100,000 to R50,000.

Vehicles falling in the engine size bracket of more than 2000 CC but less than 2500 CC will also see a tax reduction. The excise tax for these vehicles will be reduced from 100% to 75%, while the environmental levy will be lowered from R175,000 to R75,000.

For the larger vehicles with engine sizes exceeding 2500 CC, the excise tax rate will be decreased from 100% to 75%. Similarly, the environmental levy will be reduced from R175,000 to R100,000.

This means that other transports that are being classified as a hybrid but has a battery capacity of less than 200 volts, the excise tax will be maintained like it is applicable today and the classification will remain the same.

In regards to plug-in hybrids, which are transports that can be charged by an external electrical output, there will be a reduction of 5% on different categories. Vehicles which are not exceeding more than 1600 CC, the excise tax will go from 10% to 5%. More than 1600 CC but less than 2000 CC will go from 15% to 10%. More than 2000 CC but less than 2500 CC will go from 20% to 15%. More than 2500 CC will go from 25% to 20%. The environmental levy will remain zero rupees.

There will also be a fixed licensing fee which will be R1500 per year for plug-in hybrids. This means that the licensing fee will no longer be based on the Cylinder Capacity.

With the reduction in excise tax and levy of twin-cab trucks, it is expected a twin cab that sold for at an estimated of R1.3 million will be reduced to R860,000,  which represents a difference of R450,000, explained Ms Adeline.

PS Lebon emphatically stated, "No rates have increased; in fact, all rates presented are being reduced." He underscored the responsibility of motor dealers to extend these reductions to the consumers, expressing the department's expectation that “consumers receive the utmost benefit”.

PS Lebon issued a call to action for consumers, advising them to be proactive: “It is crucial for consumers to exercise their negotiating power and explore the market.”

He pointed out the abundance of dealers offering a diverse range of vehicles, implying ample opportunity for consumers to find the best deals.

He also assured that the trade department will maintain vigilant oversight of the market's response to the new rate adjustments and left open the possibility of a rate reevaluation next year, contingent on market conditions.

Text & photo by Sunny Esparon