What Your E-Toll Money is Mostly Paying For (Hint: It’s Not SA’s Roads)

A new revelation about where e-toll income is ending up is sure to have consumers up in arms. What is it, and how does it affect us all?
U
Megan
Ellis
Published: Monday, June 26th 2017
General
When e-tolls launched in Gauteng, the system was met with anger and controversy. While some have accepted the extra toll fees, a new revelation is sure to add salt to the wound. According to the Organisation for Undoing Tax Abuse (OUTA), almost three-quarters of e-Toll income is heading out the country and into the pockets of the toll collection company. This is despite the fact that the system was justified as a way to pay for the new Gauteng highways and their maintenance. So what were OUTA's findings and why do they have people so riled up?
Read More about Illegal e-Toll Summonses Below 

Original Reasoning For E-Tolls

E-tolls were implemented in order to pay for the Gauteng Freeway Improvement Project (GFIP), a R20-billion upgrade to Gauteng's highways. Most of these upgrades were completed by 2011, OUTA says. E-tolls were meant to pay for the outstanding debt to SANRAL for the project. They would also fund maintenance and future projects. As such, e-tolls were implemented in 2013. There was immediate controversy when the system was introduced, especially due to its burden on Gauteng users only. However, SANRAL motivated this by saying that the users of the upgrades (i.e. Gauteng drivers) should pay for it, as they are the ones who directly benefit. There have been arguments against this reasoning. After all, companies and consumers everywhere benefit from better roads in the country's economic hub. But the biggest issue opponents have with the system is its inefficiency and high cost.
"The installation of an elaborate and complex toll gantries, electronic tags in every vehicle and the revenue collection system for this specific project, means that users will pay not only the expense of the road construction but additionally, they must suffer the heavy and unnecessary burden of this specific toll collection system," OUTA says on their site. "It is estimated that the electronic tolling processes planned by SANRAL will cost R1,7 billion per annum (based on the tender awarded by SANRAL to ETC for this work, at R8,4bn for the first five-year period, excluding set up costs) just to operate and administer."
This means users will be paying for road upgrades, but also for the e-tolls themselves. The latest news has confirmed this notion. The majority of funds are going towards running the e-tolls and not paying SANRAL to maintain or upgrade roads. Let's look a bit closer at what OUTA revealed about the system…

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Billions Headed To Austria's ETC

Based on Transport Minister Joe Maswanganyi recent statements to Parliament, OUTA says that it calculated that the Austrian company collecting fees has received 74% of e-toll earnings. This means that the company, ETC, has been paid R2.2-billion of the R2.9-billion collected since December 2013.
"This is a clear indication of how irrational the scheme has become and what makes matters worse is the compliance levels continue to decline year on year. At an average of R55-million per month paid to ETC, and with the current e-toll income levels at around R63-million per month, virtually no money is going toward the e-toll bonds," OUTA said in a statement.
Fewer drivers are paying their e-toll accounts, meaning that income will decrease while the costs continue. Furthermore,  SANRAL - the very company highway and maintenance debts are owed to - is actually seeing very little of the toll income.
"SANRAL will still be owed around R9.2-billion as of the end of March 2017. OUTA believes that SANRAL will not be able to collect a meaningful portion of this debt, regardless of litigation outcomes going forward," the organisation said. Read More about the Gauteng Premier admitting that e-Tolls were a mistake below

What Does This Mean For Consumers?

The entire e-toll system is still being challenged in court. But the new revelations do have implications for consumers. The news means that for consumers who have paid their e-tolls, much of their money hasn't even gone to the original cause. Following years of payment, government still owes SANRAL a huge debt. It is possible that the alternative methods for recovering this debt will be implemented. But the years of e-toll payments will have been basically for nothing. You can't even argue that at least the system gave local companies income and the opportunity to create more jobs. Instead, billions of Rands have left the country. It also means that those being pursued by SANRAL for defaulting on payments would be paying a foreign company mostly. This is especially controversial since their services would not be needed if e-tolls were not implemented in the first place. SANRAL is currently pursuing R2-million in outstanding fees from e-toll defaulters. Excluding the legal fees, it is likely that up to R1.5-million would end up going to ETC anyway. If the system is scrapped, consumers will likely see an increased fuel levy and possible other taxes to recover the debt. These were the alternatives initially proposed when e-tolls were suggested. This means consumers will still pay off the debt to SANRAL, but will have also paid towards and inefficient system that cost us more in the long run and did little to solve the funding problem.