Toll Fees are Taxes

I watched the SABC report yesterday that covered the statement in the House of Assembly by the Deputy President on the issue of urban tolls. The background was that in preparation for the World Cup, South Africa spent many billions of Rand on its urban system of freeways. South African cities are largely based on road transport and millions of urban citizens use the system every day.

To recover the cost, the ANC led Government conceived the idea of electronic, automated tolls every few kilometers on the main roads, across the whole Gauteng conglomerate. What followed was a deal that is clouded in mystery, cost many millions of dollars and uses a sophisticated technology that I have not seen anywhere in the world. I hear talk that an ANC group was behind the system. The basic idea was that every time a vehicle went under one of these gantries, the system would record your number plate and charge you a toll fee. You either carried a prepaid device or got a bill at the end of the month delivered to the address at which your vehicle is registered.

I am deeply distrustful of such attempts to use advanced technologies that are not being used commonly in more advanced societies. When the system was activated people simply ignored it, attempts to collect from owners were met with distain and ignored. Bills were inaccurate and many received accounts that were for other vehicles and therefore unenforceable. The whole system faced collapse. After a year of this shambles the Government ordered a review and it was the outcome of that review that the Vice President was addressing in the House this week.

The problem is that they have spent the money to build the roads, installed the toll gantries and what must be an enormous electronic system to collect the tolls. So now the advocates of the system argue that they will enforce payment by linking e tolls to vehicle licenses. The specter of the queues that would accompany such a development and the opportunities for corruption among the Police who are given the mandate to enforce payment is just mind boggling. Every Policeman in Gauteng must be rubbing his or her hands with glee at the possibilities.

So I think the issue has not been dealt with and we will see a lot more debate and discussion as well as expensive litigation before we get some sort of finality.

When tolls were introduced here in Zimbabwe, I apposed the system on the grounds that it was a very inefficient system for raising a small tax. I asked the agency responsible to tell me what it was costing to collect the tolls. I was told that the costs were about 40 per cent of the total value of toll fees collected. Just think about it, each toll gate has to be manned 24 hours a day – the three shifts have to be collected from home, delivered to the tollgate, fed, given a uniform and paid a salary. Security is essential this is an added cost. Then there is the cost of banking the cash and supervision and management. In my view at the time the cost estimates were not realistic – but let’s accept that cost being accurate. Each toll gate costs a million dollars.

In South Africa the cost of collecting the urban tolls under the new system that is not working, is estimated at over 70 per cent. ZIMRA, the tax agency in Zimbabwe collects $4 billion a year in taxes – and the overall cost is 8 per cent of the tax collected. That is relatively low and is certainly regarded as being cost effective.

At 40 per cent or 70 per cent such a tax makes little sense especially when there is an easy and very low cost alternative. Just put a few cents on every litre of fuel sold. Such a tax is equitable (everyone pays) and costs nothing to collect – a few cheques each month from the fuel companies.

When introduced in Zimbabwe the tolls were collecting $1,7 million at each collection point. They have doubled the tolls and if traffic levels were the same this should have risen to $3,4 million with the same costs, but fuel consumption, like everything else has declined since 2013 by about 18 to 20 per cent so we can expect toll revenue to be about $2,75 million per tollgate. This means that the official costs still absorb more than a quarter of total revenue. At 4 to 5 million litres of fuel a day, a very small tax on fuel (2 cents) would easily replace the total revenues secured on the tolls and do away with corruption at toll gates the costs of collection and eliminate the delays in movement between our Cities.

Now our administration is talking about tolls on urban roads. Nothing could be more ridiculous. Can you imagine the mayhem on the Chitungwiza/Harare road at peak traffic times? The proposal simply compounds the problems associated with existing tollgates on the main roads. It is time for sanity to prevail.

However sanity seems to be a thing that is in very short supply these days. The decision by the South African Government to persist with the urban toll system despite massive resistance and evidence of the crass stupidity of the whole system and the problems of managing it in the longer term. In Zimbabwe, once ZANU PF has announced a decision it tends to be implemented no matter what arguments are raised against it. Tolls were no exception.

But it goes beyond this in that the revenues from such taxes – and that is what they are, is then managed not by the Civil Service through the well structured Public Finance Management System but by agencies who have much fewer controls and very little oversight. So corruption in such agencies is rife. We looked at a recent tender for road graders issues by ZINARA – our own toll gate agency and found that the tender had been over priced by 40 per cent and in addition the equipment secured from China was fitted with snow ploughs and used a drive system that was regarded as being very inferior to our traditional equipment suppliers. The Chief Executive resigned and left the agency but we are stuck with the graders.

Now we see a new company suddenly active on our roads – a company we had never seen before, with brand new equipment and the best of everything – no tenders, but it is everywhere. The Minister announces that “they” are taking over road maintenance in urban areas from Councils who have “failed”. When investigated it was rumored that the new company was owned by Ministers. You can come to your own conclusions but it is clear what is happening. In the meantime, the revenues collected from us by ZINARA are not distributed to Councils as required but spent “on their behalf” by the State through ZINARA.

I hate to even think what it is costing us to repair a simple pothole under these circumstances. I saw some figures from South Africa the other day and was stunned by the numbers. I bought some premix in Bulawayo the other day and repaired the potholes outside my own home – it took about two hours with a few garden tools and cost about $2 a pothole.

We pay too little time to these “taxes” and here in Zimbabwe this is a growth industry – the list of agencies of the State who have authority to collect money from the public is a long one and hundreds of millions are involved. It makes us one of the most heavily taxed countries in the world, wastes scarce resources and fosters corruption across our society and makes us uncompetitive and we are not giving this situation the attention it deserves.

Eddie Cross
Bulawayo, 22 May 2015