E-toll fight shows why a tax revolt will never work: CEO

Coenie Vermaak, CEO of toll collection group, ETC, says that withholding tax is illegal, and that a tax revolt would only make things worse, like it did with e-tolls.

Vermaak has spent the last few months urging motorists to comply with the flawed e-tolling system in Gauteng, saying that the ‘civil disobedience’ campaign against the system has all but bankrupted road agency Sanral, and iced future developments of much-needed infrastructure around the province.

Commenting on Western Cape premier Helen Zille’s promise this week to lead a tax revolt if action isn’t taken against corrupt government officials, Vermaak said that tax revolts never work, and simply put an additional burden on those who stay on the right side of the law.

“Tax revolts never work, they just create pools of debt that taxpayers still have to deal with, long after the electioneering and emotional grandstanding are over,” he said.

The tolling CEO said that since the ‘tax revolt’ against e-tolling started in 2013, there has been a severe impact on Sanral as well as the country’s roads.

“Before the start of e-tolling on Gauteng’s highways, Sanral’s credit rating stood at investment grade. In July last year, Moody’s downgraded Sanral’s long-term local and foreign currency global scale ratings which may still worsen.”

He added that the original loan that Sanral acquired on the open market to fund the first phase of the GFIP totalled R22 billion. But, due to the non-payment of e-tolls, this figure has ballooned to R45 billion and continues to mount up.

“The result of this tax revolt against e-tolling in Gauteng is that taxpayers are now required to pay 200% more than what they should have. Sanral cannot easily get further loans in order to continue with Phase 2 of the Project, to which millions of rands in economic potential lies in wait,” he said.

Vermaak said that because tax revolts never get 100% buy-in from taxpayers, those who remain end up bearing the burden.

“Someone, somewhere has to pick up the tab,” he said.

E-toll fight is not a tax revolt

Civil action group, Outa, which has championed the fight against e-tolling, responded to Zille’s characterisation of the anti-e-toll campaign as a tax revolt by insisting that it was not one, and distanced itself from calls to lead one.

The group said that it does not support tax revolts, as they are illegal, and would not lead any such movement.

According to Outa, what sets the anti-e-toll movement apart from a tax revolt is that the legality of e-tolling is still in question, and has not been fully tested in court.

The group has been waiting for years to have the legality of e-tolling tested through the courts, but has so far not seen any follow through from the thousands of summonses sent out by ETC to motorists who have not paid their tolls.

Outa CEO Wayne Duvenage said that calling the fight against e-tolling a ‘tax revolt’ is also a mischaracterisation because the group has never said it doesn’t want to pay for infrastructure – its only issue is with how funds are collected, and the public consultation that goes with it.

“The expensive, cumbersome and irrational drive-now-pay-later e-toll scheme was always going to be unenforceable and virtually impossible to administer and thus it was reasonable and very possible for civil society to challenge this matter,” he said.

Duvenage previously pointed out that, had a different method of fund collection (such as a fuel levy) been implemented when the first push back against e-tolls took place, Sanral’s debt would have long since been paid off.

Read: A tax revolt is already happening in South Africa

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E-toll fight shows why a tax revolt will never work: CEO