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South African Treasury Attacks E-Tolls Delay

by Lorys Charalambous, Tax-News.com, Cyprus

21 May 2012


In his National Treasury Budget Vote speech, the South African Finance Minister Pravin Gordhan, has branded as “unhelpful” the delay in the implementation of road tolls for the Gauteng Freeway Improvement Project (GFIP), as it could adversely affect other infrastructure projects in the country.

The GFIP, one of the largest projects to date of the South African National Roads Agency Limited (SANRAL), was, from April 30 this year, to have been the country's first multi-lane free-flow toll system using e-tolls. Those tolls had been reduced already, last year, by the federal government agreeing to a fiscal contribution of ZAR5.75bn (USD688m) to the project.

However, earlier this year, an application was 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”.

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 interdicted from implementing the e-tolls collection system, with the latter adding 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 would be through a ‘user-pay’ principle.

Therefore, after OUTA was successful in court on April 28 and SANRAL was restrained from levying and collecting the GFIP e-tolls, the government appointed a review committee to look at all aspects of financing the project, including SANRAL’s ability to pay back the debt already incurred in financing construction of the new road.

While the government has already announced its decision to appeal the interim order to stop e-tolling, Gordhan reiterated that “it is clearly unhelpful, if we are to make progress in these challenges, that an important source of revenue for the road system has been delayed”.

He commented that the project had effected improvements to Gauteng's freeways, bringing about substantial improvements in the flow of traffic and benefits to road-users, and that “the government was also mindful that improvements were needed on alternative roads in the province”.

Gordhan also stressed that both the government’s and SANRAL’s GFIP investment “has been made not out of general revenue, but through debt which has to be repaid. Cabinet has reiterated its commitment to the e-toll system as an efficient and appropriate mechanism of partial cost recovery from road-users.”

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

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