Vehicle licence fees in the Western Cape will not increase for three years, as the provincial government aims to bring them in line with fees in other provinces.
The Western Cape's high licence fees have been counter-productive, encouraging people to register vehicles where fees are lower.
Transport companies and fleet owners, in particular, were hard hit by the high fees and chose to register elsewhere.
The result was that the province lost income from the fees that could have been used for road maintenance.
The decision to freeze licence fees was made after it became clear that many motorists were opting to register their cars in other provinces because it was cheaper, said Robin Carlisle, MEC for Transport and Public Works.
The Western Cape had the highest registration tariffs because it had consistently increased its fees ahead of the other provinces.
"It is quite clear that the rate of our tariff levels has pushed motorists to register their vehicles in other provinces where it is cheaper to do so," Carlisle said.
It had cost the department "substantial revenue", which Carlisle said could have been used to upgrade public transport.
He said the decision to cap the fee would bring financial relief to motorists.
"Motorists are already over-burdened by the rising cost of fuel and other expenses related to maintaining their vehicles," he said.
"This policy decision will definitely provide them with some much-needed relief for the next few years."
Licensing fees were up to 50 percent cheaper in other provinces, said department spokesman Solly Malatsi.
For a small car, the average annual fee was R279 and for larger vehicles it ranged from R786 to about R1 500 in the Western Cape.
Malatsi said the department did not have exact figures on how many motorists had registered their cars in other parts of the country.
But the vehicle licensing services division had reported a steady decline in registrations in the Western Cape.
"The trends have told us that cross-border licensing is taking place," said Malatsi.
The move followed the Western Cape's agreement with other provinces not to increase its fees until its fees were equal to the tariff levels of the other provinces.
Carlisle said he was confident that this decision would result in more motorists registering their cars in the Western Cape.
High licence fees are not the only threat to motorists' wallets in this province. For many years, Western Cape motorists have also been living under the threat of a special provincial fuel levy.