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By Moneyweb

Moneyweb: Journalists

E-tolls vs SABC: User-pay principle only applies when govt wants it to

While government insists on the user-pays principle for e-tolls, why are they fine with a household levy for the SABC and taxpayers subsidising the Gautrain?

The government and some state-owned entities appear to be painting themselves into a corner on the user-pay principle, which the government continually uses to justify the e-tolls on the Gauteng Freeway Improvement Project (GFIP).

Finance Minister Enoch Godongwana reportedly cautioned earlier this month against forgiving road toll debt in a presentation that was delivered to an ANC meeting and seen by financial services media company Bloomberg.

It said Godongwana told the meeting the government, among other things, will need R4.6 billion to forgive unpaid highway tolls in central Gauteng, adding that this “request has serious long-term consequences if the user-pay principle is rejected”.

SABC ‘suggestion’

Meanwhile, the South African Broadcasting Corporation (SABC) in a submission to public hearings by the Department of Communications last week repeated its suggestion of a household levy to help recover and stabilise its finances.

In terms of this proposal, the household levy will be based on the possibility of access to SABC services, rather than actual usage of its services.

Also Read: What you need to know about the SABC’s new household levy

Organisation Undoing Tax Abuse (Outa) CEO Wayne Duvenage said the household levy suggested by the SABC “sends mixed messages about the user-pay principle and sends a message of a very confused government that is clutching at straws where they can”.

Duvenage said only local government will ever be able to administer a household levy but the SABC is a national government issue.

“So the whole household levy idea is a non-starter, it’s a farce and it’s not going to happen,” he said.

Principle in perspective

Duvenage added that the user-pay principle is internationally accepted but only if it can be managed.

When user-pay cannot be managed, governments have to find other mechanisms, he said.

Duvenage said user-pay on electricity is easy, with users cut off if they do not pay, but if e-tolls and SABC television licence fees cannot be managed “they are dead in the water”.

“It’s not about the principle, it’s about the applicability and the enforceability,” he said.

Automobile Association (AA) spokesperson Layton Beard said the user-pay principle is not applied to the Gautrain although people are paying fares to use the rapid rail system, because Gautrain users are subsidised through the patronage guarantee to the Bombela Concession Company (BCC), the operator of the Gautrain, but road users are not subsidised.

The Gautrain patronage guarantee is a subsidy to the BCC when its total revenue from the Gautrain users is below a contractually agreed amount.

According to the latest Gautrain Management Agency (GMA) annual report, the patronage guarantee payment by the GMA increased to R1.971 billion in the year to end-March 2020 from R1.667 billion in the previous year.

Taxes …

Beard said it is not appropriate to just look at the payment of e-tolls on GFIP and “just say yes or no” because there is a link between the taxes that people pay and the money that has already been used to subsidise the Gautrain.

He said various ministers of finance have had very strong opinions about the GFIP and e-tolling but need to consider what consumers are already paying when they use their private vehicles on the roads.

“They are paying to have those vehicles on the road in the form of licence disc fees, they are paying to have those vehicles on the road in terms of the taxes on the fuel that they use, they are paying to have those vehicles on the road through the taxes they pay through income tax.

“They are already being taxed in three ways. Now they have got to pay more because their taxes are being used to pay a private concessionaire and the GFIP itself is completely onerous on them.

“That is why they have decided not to pay and the compliance rate with e-tolls is so low,” he said.

Also Read:  Emigrating? You may have to pay additional exit tax

Transport Minister Fikile Mbalula has on a number of occasions over the past 18 months said a final decision on the future of e-tolls on the GFIP is imminent but a decision has not yet been announced.

President Cyril Ramaphosa in 2019 appointed Mbalula to head a task team to report on the options available for the future of e-tolls by August 2019.

Mbalula said during his budget vote speech in May this year that he had presented nine possible solutions to the e-tolls impasse and confirmed the first of these options was “to scrap the e-tolls”.

Divergent opinions, even within the ruling party

Beard said the AA has a lot of difficulty reconciling the different views on e-tolls because there are so many divergent opinions on it, even within government.

This is a reference to Gauteng transport MEC Jacob Mamabolo stating during a radio interview in May 2021 that e-tolls are “being scrapped” and the ANC in Gauteng on several occasions stating that e-tolls on the GFIP must be scrapped.

Beard said the AA believes the current e-toll model is not sustainable, it does not work, and that an alternative solution needs to be found.

Read: ‘Someone should explain e-tolls to out of touch deputy transport minister’

Duvenage said Godongwana’s comments, and specifically his reference to the R4.6 billion in outstanding e-toll debt, “signals a bit of a different approach to e-tolls if you read between the lines”.

“I think they [government and National Treasury] are acknowledging that the [GFIP] bond and interest on that bond is going to have to be picked up by the state and they are going to try and get some of the outstanding e-toll money from users.

But Duvenage said the reality is that there is no way the South African National Roads Agency (Sanral) can enforce the non-payment of e-tolls because it has stopped summonsing motorists for non-payment, enforcement orders are not being issued, and motorists are not being blacklisted or having their licences withheld for non-payment.

He added that it will be a farce and the public “will see through it” if a decision on the future of e-tolls is made on the eve of the local government elections on November 1, especially if the ANC claims it as “their victory” because they called for the scrapping of e-tolls.

The Congress of South African Trade Unions (Cosatu) in Gauteng warned in August that there will be dire consequences for the ANC in Gauteng if Mbalula does not make “an announcement favourable to our demands by the end of September”.

It said the e-toll policy has failed, with motorists not paying even when Sanral offers them discounts.

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