The Road Accident Fund (RAF) has expressed strong opposition to the plans by the South African Revenue Service (SARS) to deduct R5.1 billion from its fuel levy allocation.

This after moves by SARS to pay a substantial rebate, with the payment tied to power utility Eskom.

Briefing the standing committee on public accounts (Scopa) on Tuesday, Deputy Minister Mkhuleko Hlengwa said SARS billed RAF R5.1 billion for a rebate of a user in so far as their processes are concerned.

“RAF must pay out in tranches of R5.1 billion to SARS for them to then transmit to that user. The matter is in court because the mediation did not yield the necessary results,” Hlengwa said.

He also said RAF has since secured an interim order against SARS from deducting the money.

“We anticipate the final court order by the end of this month. For now, there is an interdict on SARS from collecting the first tranche of that money,” Hlengwa said.

While Hlengwa and Scopa chairperson Songezo Zibi did not name the entity that claimed a significant rebate from SARS, RAF CEO Collins Letsoalo said: “You are trying to run away from the word Eskom, but you can actually name it.”

He said the matter has to do with administering the Customs Excise Act (CEA), which has a provision for SARS to provide an audit certificate every two months once they have collected the money.

“This has not happened over the last probably seven years.”

Letsoalo told Scopa that SARS informed them in November that R5.1bn would be deducted in tranches of R2.5 billion and R2.6 billion in January and February respectively.

SARS apparently had a dispute with Eskom since 2019 and did not inform them.

“They refused Eskom this rebate since 2019 and suddenly they entered into a settlement agreement to pay it. Our argument is simple that CEA is very clear about what they must do, about the monies that are collected and we are saying this is not due to Eskom in our view and therefore they can't deduct that money.”

He said SARS should follow the law if it wants to make any deduction from their allocation.

“The law says you must audit the certificates, they were never audited,” he said.

Letsoalo also said the law stipulated how certain things must be followed, including the settlement agreement.

“We say that was not done. All we are saying is that we disagree and they (Eskom) are not entitled and, therefore, that money belongs to us,” he insisted, adding that RAF was not part of the settlement agreement.

“That settlement agreement is not part of CEA and therefore no money must be deducted... They can agree with the taxpayer. That is not our business, that is theirs,” he said.

“All we are saying is that it can only be deducted from our fuel allocation if it went according to CEA and it did not, and, therefore, they can't do that. They can continue with that settlement agreement and we are not a party to the settlement agreement,” said Letsoalo.

Hlengwa said they would update the committee once the matter was finalised in court.

He reiterated that there was an interim interdict, and a judgment, expected by the end of the month, may provide clarity.

“What we will do once the matter reaches a logical conclusion is to update the committee,” he said.

Hlengwa noted that the court case was another legal matter of the lived reality of RAF.

“It has material consequence to its finances if you look at the quantum of the money,” he said.

Earlier, Hlengwa said the Transport Department was withdrawing the RAF Amendment Bill that is before Parliament.

“We need to ensure long-term sustainability of RAF and keep it as a going concern. It needs to be assisted to generate revenue and be able to explore other options in so far as revenue is concerned,” he said.

The Bill deals with the administration of benefits and payouts to road accident victims.

Hlengwa said it was clear that RAF in its form was not sustainable if lump sum payments were anything to go by.

“We need to look at how we pay out. Of course, this will change and alter the regime of benefits.”

He also said the department would meet with RAF and they will have an opportunity to make inputs.

Board chairperson Zanele Lorraine Francois complained about the lack of increase in RAF fuel levy for five years.

“It does have a significant impact on our funding given this organization is already underfunded,” Francois said.

She noted with surprise and concern the withdrawal of the RAF Amendment Bill.

Francois said the strategic turnaround and sustainability of the fund was at the back of the Bill being enacted into law.

“The board will go back to the drawing board and start reviewing the strategic outlook of this organisation. This is a fundamental shift to the mandate of RAF so we are going to need to realign our strategy, plan structure, and funding model. We are also looking to engage with the National Treasury to find other viable ways to fund RAF,” she said.

mayibongwe.maqhina@inl.co.za