E-tolls toxic to small business growth

Business does not support the view that it should absorb the cost of e-tolling, Business Unity SA (Busa) said on Friday.

“Business has always indicated its willingness to come on board and to explore the funding mechanism [for the improvement of Gauteng’s highways],” Busa economic policy executive director Kgatlaki Ngoasheng told the advisory panel on e-tolling in Gauteng and its socio-economic impact.

“In this instance… we are proposing the fuel levy.”

He said infrastructure was key to enhancing economic activity. However, the e-toll system was “toxic to small business growth, the delivery of goods to markets… and contradicts the National Development Plan growth ambitions”.

Busa suggested that just under 10 cents needed to be added to the fuel levy to recover the costs of repayment annually.

Ngoasheng said business recognised the “user-pay principle” as a necessary and proportionate funding mechanism “especially within the constrained fiscal environment”.

“But, this needs to be under the right circumstances and in the case of e-tolling it is not the right circumstances.”

Ngoasheng said one of the methods of funding the Gauteng Freeway Improvement Project (GFIP) through the fuel levy involved the ring-fencing of taxes.

He said the National Treasury was hypocritical for saying it was not in favour of ring-fencing taxes when it has done so for certain infrastructure projects.

“Ring-fencing of taxes is one way which government can enforce accountability in government agencies,” he said.

“The National Treasury, which often indicates that it is not in favour of ring-fencing taxes, has actually recently implemented this particular ring-fencing of taxes for infrastructure financing of Transnet… talk about hypocrisy.”

Using the fuel levy would cause less “pain” in Gauteng because the pain would be spread out across the country.

“It is not mentioned that the revenue generated by Gauteng partly subsidises service delivery across the country, and yet when other provinces have to partake in ensuring that Gauteng thrives so that they too can thrive, it attracts criticism.”

He said ring-fenced tax examples included the solar water geyser fund, which was taken from the electricity levy, and the portion of the fuel levy given to the Road Accident Fund.

Ngoasheng said Busa was also in favour of “shadow tolling” – which still involved the fuel levy, but not the ring-fencing of taxes.

“It is the same process, but only you don’t dedicate it to the specific funding of a project. It probably could be collected and be part of the fiscus.”

The panel, which is holding hearings in Midrand, is focusing on the implications and perceptions of financing the GFIP and e-tolls.

On Monday, the Gauteng provincial government announced the panel would embark on a month-long consultation process, starting on Wednesday, with organisations and individuals.

Organisations were invited to make submissions on the economic, social, and environmental impacts of the GFIP and e-tolls.

The panel was expected to report to premier David Makhura at the end of November.

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E-tolls toxic to small business growth