Buying e-tags makes economic sense – Treasury

Motorists do not have to buy e-tags to use Gauteng’s toll roads, but it makes economic sense to do so, Treasury director general Lungisa Fuzile said on Friday (13 April 2012).

“Whilst it makes economic sense from the individual road user’s point of view to buy the e-tags to save, you don’t have to have a tag to use the road,” he said at the Reuters economist of the year awards in Johannesburg.

“Therefore Sanral [the SA National Roads Agency Limited] does not need you to have a tag in order to track the person down and deliver the bill relating to the use of the road,” he said.

Motorists will have to pay to use major highways around Johannesburg and Tshwane from April 30, with payment through an automated number-plate reading system.

A recent march by the Congress of SA Trade Unions highlighted opposition to the tolls, which many motorists are threatening not to pay.

Fuzile said he accepted that there was an argument that some people need to be cushioned from the user-pay principle.

“But to reject the user-pay principle and expect someone else to pay was ‘bad economics’.”

“To say ‘phansi with user pay’ [down with user pay]… is problematic. It takes things too far,” he said.

In London, vehicle users had to pay a congestion charge, just because the roads were clogged, he said.

The fee had nothing to do with whether the roads were good, or whether the road user was making savings on vehicle wear and tear.

In South Africa, the roads were good, and road users were getting a good deal.

Fuzile said that when it was decided to toll the roads to fund the upgrades (in Cabinet in 2007), the economy was doing well and the recession of 2008/09 was yet to come.

He conceded that people were now feeling the pinch and that the tolls were hard to digest.

However, rejecting the user-pay principal was unhelpful and did not make economic sense.

In his Budget in February, Finance Minister Pravin Gordhan announced that drivers of ordinary vehicles would pay 30 cents a kilometre, instead of the original 66 cents.

Fees would be capped at R550 for frequent users and taxis. Other accredited public transport providers would not have to pay the e-tag fee.

Heavy vehicles will would get a 20 percent discount if they travelled off peak.

Gordhan allocated R7.57 billion to Sanral for the financial year towards the R20 billion debt it had incurred to upgrade the roads.

“We are convinced that this is actually a good deal, and therefore it doesn’t require a contingency. Plan A is Plan B and vice versa,” said Fuzile.

After his address, he presented the Thomson-Reuters Economist of the Year Award to Dennis Dykes, chief economist at Nedbank.

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Buying e-tags makes economic sense – Treasury