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Court Rules Against South Africa In Road Tolls Case

by Lorys Charalambous, Tax-News.com, Cyprus

30 April 2012


Shortly after the South African Department of Transport announced that the implementation of the Gauteng Freeway e-tolls had been postponed for a month, it found out that, in fact, levying of the tolls has been halted for a much longer time following a decision in the High Court.

The South African National Roads Agency Ltd (SANRAL) decided, in 2007, after extensive planning and consultation, to finance the construction and maintenance of the Gauteng Freeway Improvement Project (GFIP) through an electronic tolling system.

The GFIP, one of SANRAL’s largest projects to date, comprises different phases to upgrade and implement new freeway networks, and would be the country's first multi-lane free-flow toll system using e-tolls, which were scheduled to begin on April 30, 2012. Those tolls had been reduced already, last year, by the federal government agreeing to a fiscal contribution of ZAR5.75bn (USD743m) to the project.

However, an application was recently brought before the North Gauteng High Court by an alliance of transport and consumer groups led by the Opposition to Urban Tolling Alliance (OUTA) for an interdict against the levying and collection of the e-tolls, which were said to be “an inefficient, costly and unnecessary additional burden on road users, who already pay through a number of taxes for the benefit of road use”.

The National Treasury, in applying to join in the court action, indicated that there would be serious negative implications for the future financing of roads and investment in public transport were SANRAL to be interdicted from implementing the e-tolls collection system.

SANRAL also pointed out that, as insufficient financial resources are available to implement capital intensive projects (such as the GFIP), the most equitable way to pay for the road improvements is through a ‘user-pay’ principle. Nevertheless, the Department of Transport, given the on-going court action, did agree, on April 26, to postpone the implementation of the e-tolls until May 30.

However, it was then learnt, on April 28, that OUTA had been successful in court and SANRAL was indeed indicted and restrained from levying and collecting the GFIP e-tolls, pending the outcome of a court review that could take several months.

Despite the probability that SANRAL would sustain financial losses due to its decision, the court decided that too many people would also suffer financial hardship if the e-tolls were introduced. The judge agreed that OUTA had a prima facie right to argue for a review.

TAGS: court | South Africa | tax | law | fees | travel and tourism | construction | Africa

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