Counting the cost

2011-02-16 00:00

I HAVE been following the public outcry about the Gauteng freeway tolling scheme with interest. I daresay that many people here would have become interested suddenly when it was announced that similar schemes are planned for KwaZulu-Natal and the Western Cape.

Anyone who has driven along the freeways in the Johannesburg area during the past number of months would have noticed the gantries being erected in preparation for this innovation. There are 42 covering the 185 kilometres of roads.

It is rather typical of the public that objections have emerged too late. Apparently, the proposal document, laid on the table for public comment some two or more years ago, elicited objections from a very small percentage of the population, nowhere near enough to demonstrate opposition to the scheme. Now that the tariffs have been advertised, motorists are counting the cost and they are not happy with their sums.

It seems that those who travel a fair distance daily along the freeway network will have a significantly increased transport bill. It is little comfort that alternative routes may be chosen to avoid these costs.

The South African National Roads Agency Limited (Sanral) promised a rate of no more than 50 cents per kilometre. The claim now that inflation has increased this to the current 66 cents may be described as dissembling. This is the fee without discount and for those motorists who choose not to have an electronic tag fitted to their vehicles.

Over the years, there were many within the Pietermaritzburg Chamber of Business who were vigorous in their opposition to the principle of tolling. They argued, as many Gautengers are doing currently, that the costs of road maintenance must come from the national fiscus. I favour tolling, however; perhaps not at what appears to me to be a very high rate, but I think the user-pay basis for tolling is a sound principle. The public, it seems to me, has a blind spot. This is the lack of appreciation that the government also has to pay for what it provides. In fact, there are other associated blind spots: government does not have infinite financial resources and the cost of road maintenance, and other infrastructure maintenance as well, for that matter, is extremely high.

Some years ago the estimate of what it should have cost to maintain Pietermaritzburg's roads (those that are the responsibility of the municipality) was R58 million a year. Over some period of years, the municipal budget could afford no more than R30 million or less. This accounts for the deplorable state of the roads in some areas. False economy it might have been, but the reality is that when money is tight, maintenance is one of the first things to be sacrificed. There is value, therefore, in toll money being ring-fenced to ensure that the roads are maintained properly and improved in response to future needs. It is highly unlikely that similar national funds would be allocated on a regular basis if normal taxation were to be the source.

Ironically, people have expressed strong views about ring-fencing in a recent discussion prompted by the release of a discussion document relating to a carbon tax which, it seems, is destined to be imposed on companies in a couple of years. They argue that if this income were ring-fenced specifically for environmental purposes, the tax would be more acceptable. By way of example, the plastic bag levy, which has accumulated billions, appears to have become just another source of government income. And the concern in this regard is that money from the "deep black hole" is often used in ways that are unsupportable in relation to the country's pressing needs.

The question to the objectors of user-pay taxes is: would you be happier if all these additional levies and charges (which are taxes, after all) were consolidated into income or company taxes, thereby increasing their quantum by substantial amounts? But there is this consideration: the taxpayer base is small, less than the base of users. Municipal electricity income provides a good example. We are not comfortable with the cross-subsidisation of the rates account, but the reality is that there are more electricity consumers than ratepayers and if the cross-subsidisation were not accepted, the fewer number of ratepayers would have to bear the cost of what is required by the municipality.

• Andrew Layman is a former headmaster and now the CEO of the Durban Chamber of Business.

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