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South Africa Receives Final Court Go-Ahead For E-Tolls

by Robert Lee, Tax-News.com, London

17 December 2012


The South African government has welcomed the appeal ruling handed down by the North Gauteng High Court that it had followed due process and met all regulatory requirements in the implementation of e-tolling to fund the Gauteng Freeway Improvement Project (GFIP).

The GFIP, one the largest projects to date of the South African National Road Agency (SANRAL), was, from April 30 this year, to have been the country's first multi-lane free-flow toll system using e-tolls, but a successful application for an injunction in the High Court against their levying and collection was brought by an alliance of transport and consumer groups led by the Opposition to Urban Tolling Alliance (OUTA).

OUTA protested that the tolls would 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."

However, in reply, the National Treasury indicated that there would be serious negative implications for the future financing of roads and investment in public transport were SANRAL to be prevented from implementing the e-tolls collection system, with the latter adding that the most equitable way to pay for the road improvements, when their financing has to be borrowed, is through a "user-pay" principle.

The government therefore appealed against the initial High Court decision, and, in court papers, Finance Minister Pravin Gordhan disclosed that SANRAL's cash reserves, which include a ZAR5.75bn (USD665m) government contribution to the project, would be depleted by the first quarter of 2013 should e-tolling not go ahead, unless additional transfers were made from the Treasury through higher taxes for road infrastructure.

In addition, it was said that failure to collect tolls would raise the risk of SANRAL defaulting on its loans, which would trigger an immediate repayment of its entire loan book of ZAR37.1bn, and the government would also be obliged to support SANRAL by repaying the rest of its unguaranteed debt totaling another ZAR14.1bn.

In a statement following the High Court appeal ruling, Spokesperson for the Deputy President, Thabo Masebe, said the judgment vindicated the government's view that it had followed due process and met all regulatory requirements in declaring the GFIP to be a toll road in 2007.

"Government calls on all parties to respect the decision of the court and together move forward in the implementation of the e-tolling system," he added. "The development of a country's roads infrastructure plays a critical role in establishing a thriving economy and sustaining growth through the efficient movement of goods and services."

SANRAL and the government have now urged vehicle owners to register and obtain their e-tags as soon as possible to ensure that they qualify for the full discounts available for their travel. It was added that the Minister of Transport is to make an announcement on the way forward shortly, and that e-tolling is expected to go ahead early in 2013.

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

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