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The fuel levy may seem viable from an administrative view, however, there are issues that are often overlooked about the approach for road funding. The fuel levy is not a designated tax for roads. It is a tax collected like every other tax paid by consumers to generate revenue that will be allocated to social demands and other road infrastructure.

Increasing fuel levies to fund the Gauteng Freeway Improvement Project (GFIP) is not guaranteed.

A total of R53.2 billion is collected from fuel levies and vehicle license fees. R46 billion came from fuel levies and R7.2 billion came from vehicle license fees. The National Treasury allocated R56.3 billion to road transport.

This means that the National Treasury allocated more to road transport than is collected from the fuel levy and license fees. Dedicating fuel levies purely for road infrastructure implies an increase on levies to match the National Treasury allocations, excluding future expansions.

Moreover, the fuel levy is a regressive tax that impacts disproportionately on the poor. It discriminates against them in three ways:

• The 2013 National Household Travel Survey found that 69% of South African households use taxis as transport and 20.2% buses. Any increases in the fuel levy will result in higher taxi and bus fares which poorer people won’t be able to afford. The bulk of buses and taxis make little use of the GFIP highways. As a result, an increase in the fuel levy means that people who are in public transport will pay more than those who use the GFIP. Thus, public transport is exempt from GFIP tolls
• Many poor people travel great distances for the outskirts of the city to work. Their cost of travel is a much higher percentage of their income than it is for richer people, thus increase in levies will increase this burden.
• Poorer people who own vehicles generally have older models. Older vehicles are less fuel efficient than modern ones. This means the cost in fuel consumption differs. Imposing a fuel levy of, say, R1.5 a litre would increase the cost of that journey to R112 for a modern vehicle and R186 for an older vehicle. This is an increase of R13 and R20 respectively.

Many people suggest that the rest of the county should contribute to tolls because Gauteng manufactures most of the goods being distributed across the country. However, in 2013 the Gauteng economy constituted 33.8% of the South African GDP.

In 2011 (the latest year for which data is available) the Gauteng share of South African total household income was 41%. Therefore, Gauteng citizens have little need to be subsidised by other people living in poorer parts of the country.

Using the fuel levy to fund South African roads is not as simple as it sounds. The whole question of how South Africa’s roads should be funded is best illustrated by using the proposed plan to toll the clogged N1 and N2 around Cape Town.

• Tolled roads result from their positive contribution to the economy. This principle drives all of SANRAL’s numerous toll projects country-wide, including the N1/N2 Winelands project.
• Large surface areas of the N1/ N2 are currently in poor condition, exposing road-users to accidents, inconvenience and potential damage to vehicles.
• Included in the improvements would be new pedestrian bridges, better lighting and more surveillance cameras for pedestrian safety.

The legislation does not allow for funding of roads from sums appropriated from the Fiscus. The N1/N2 competes with all projects in the more than 18 000 km non-toll road network, including the “unfunded projects” to the value R120 billion marked as viable potential toll roads.

It will take between 10 to 20 years to fund this project from SANRAL’s annual non-toll grant from the National Treasury – currently standing at R12.5 billion per annum. Using the user-pay principle on these roads, it will facilitate loan funding of between R8 billion and R10 billion through the private sector, in order to upgrade and repair these roads in the next three years.

This will reduce congestion, improving service level transport infrastructure and save time and vehicle operating costs that will cost less than paid tariffs.

Since the 1990s, SANRAL’s non-toll allocations have not been sufficient to undertake any road expansion or new road construction projects. SANRAL received R12.5 billion in 2015/16 as a non-toll allocation from the national budget.

An additional R11.9 billion is needed per year (at 2014 prices), which is not currently allocated by the National Treasury to fund the N1/N2 Winelands toll road project and a number of major SANRAL road expansions.

Current planned major SANRAL road expansion projects over the next 10 years are expected to cost R120 billion (2014 prices).

In an effort to reduce the country’s debt costs and provide an improved investment climate, the government introduced a budget ceiling which means no additional resources are allocated and any reprioritisation has to be funded from savings in other areas. Thus, tolling is the most sensible, economically viable solution.

It is important to know how roads are financed in order make accurate decisions when choosing routes for traveling. South Africa has the tenth largest road network in the world – 750 000 kilometres! SANRAL is responsible for the national road network which is 21 403 km. Out of these, 18 283 km (85%) are non-toll roads and 3 120 (15%) are toll roads and insuring that these roads are well maintained is a challenge.

SANRAL receives funding from the National Fiscus for the maintenance of the national non-toll road network of 18 283 km, but it remains insufficient. The toll roads are self-funding through toll fees.

The South African road network (2014) indicates an estimate of R197 billion in current road backlogs, which requires R89 billion per annum to address the backlog and to sustain road networks. However, only R44 billion was spent on roads in the 2014/15 financial year across all government levels. The current allocation of R44 billion is only 49.4% of the total requirement of R89 billion.

The total revenue collected from road users in 2014/15 is R53.2 billion. R46 billion of the revenue is generated from general fuel levy. A large portion of it benefits our primary sectors and the sharing of fuel levy revenue with metro municipalities, thus it is unviable for road development. The R7.2 billion revenue from vehicle license fees is seen as general provincial income and not paid across to the national treasury nor ring-fenced for roads.

R56.3 billion of the total expenditure was spent on transport and road development in 2014/15. SANRAL receives funding from the National Fiscus for maintenance of the non-tolled roads but it is far from the required levels. In 2014/15 the agency received R11.9 billion and in 2015/16 it will receive R12.5 billion.

As a result of the ceiling on consolidated expenditure introduced by the National Treasury, SANRAL has the following options for funding expansion projects:

Reallocate Funds

Reprioritise existing non-toll allocations over a 10-year period from maintaining low congestion roads. This will result in delaying maintenance on an old road network.

The national road network deteriorated from 11% of poor and very poor roads in 2014 and if continued, will deteriorate by 47% of the network in poor or very poor condition by 2024. This approach will be disastrous, as without maintenance these roads will deteriorate rapidly with the a negative impact on the economy and road safety. As a result it cannot be endorsed.

Non-Implementation

Not to implement expansions projects at all. This will have a negative impact economically and socially and as such, deficient transport systems in quality, capacity and reliability have an economic cost such as reduced or missed opportunities.

Mobility is one of the most fundamental and important characteristics of economic activity.
The result of doing nothing will be congestion. The social impact of congestion means commuters spending long hours on the road away from their families and moreover, congestion has a negative effect on the environment.

User-Payment System

SANRAL is to implement some of these projects using direct user charging, i.e. tolls