By Saliem Fakir · 18 Jan 2012
The worst time to impose a tax is when a country’s economic woes are entering a new era of economic uncertainty. Nobody knows exactly what 2012 holds for us, but most believe it is unlikely to be easy for already stretched pockets.
Margaret Thatcher learnt the hard lesson: never push for more taxes when people are already feeling the pinch. After she almost stripped Britain of the last vestiges of a caring economy, she added more salt to the wound with her community poll-tax idea in 1991, which met with widespread resistance and her downfall.
Toll roads are generally perceived as an economic burden, as opposed to an elevator of economic prospects.
Toll roads don’t only punish the pockets of individuals, but also affect the price at which goods and services commute from one part of a country to another. In the end, they are seen as double taxation, both directly and indirectly through the increased costs of goods and services.
Yet roads are an important public good that is essential for modern economies. It is how we are willing to pay for them that is a source of public consternation.
Citizens - both rich and poor alike - pay a fuel levy and general taxes, in one form or another. They would be right in their view that it is government’s responsibility to look after our roads and pay for them from these taxes and levies.
Of course government doesn’t have the money to pay for everything because there is obviously more than just roads that need to be built, such as schools, hospitals and other essential infrastructure -- from a limited pool of funds.
Government can borrow funds to provide public goods in advance and pay the cost of loans over time, as it collects taxes and sets aside some of these for the payment of new infrastructure. Borrowing money does, however, cost more.
Politicians and government in general are entrusted to understand needs and make wise public choices. Sometimes they are better informed than citizens, as they have the opportunity to consult a diversity of constituencies, have the wherewithal to commission robust studies as well as draw on the advice of experts.
At times their choices are good. For instance, nobody disputes that a national health care system is good for all. Even medical aid schemes see the benefit of such a system, despite some opposition, as the medical schemes are also victims of unjustifiable pricing from private hospitals and related services.
Nonetheless, not all public choices made by government will be agreeable. And not all of its choices benefit the right constituencies. Not all of its choices necessarily take into account unintended consequences. And, government itself is not always free from special interests, both inside and outside the bureaucracy, which allow a few individuals to influence public choice against the public interest.
Nevertheless, whether a public choice is perceived to be a good or a bad investment depends a lot on how government decision-making is perceived and how well government works.
Provided it is seen to have deliberated sufficiently and exhausted all opportunities to resolve disputes with dissatisfied constituencies it will have the right to continue as it has, weighing up the benefit to the economy and the majority against the interests of a few.
The only way in which certain public choices can be stopped in their tracks is through recourse to the courts. Often it tends to be the more privileged citizens fighting for their own interests in this manner, unless they have rallied the support of broader constituencies and are thus deemed to be speaking on behalf of broader groups.
As to the case of direct action, this certainly worked against the South African National Roads Agency Limited’s (SANRAL) attempt to go ahead with the e-tolling scheme on Gauteng’s roads, which has now been put on the hold. Only 10% of the provinces road users signed up to the e-tolling scheme from an estimated two million users. Concerted union, business and other civic pressure came to bear on the national minister of transport (who has tried to distance himself from the decision, saying that it was adopted before his time) and government as a whole.
Whether people will pay for toll roads is also influenced by how well citizens feel the government is doing in managing our roads. Everybody uses roads and we all have experience of the quality of our roads first hand.
In a sense, roads can speak volumes about the state of public services. It is therefore much easier to make synonymous, potholes and poor public service, in the same breath.
A general deterioration alludes to either poor management or, as has been shown in some provinces, road repair contracts that go to the wrong people who are only interested in filling their own pockets.
Toll roads have that added weight of public distrust because they tend to be built and managed via public-private partnerships. Often these contracts are not transparent because of supposed “commercial confidentiality”. So the suspicion grows that there is collusion between state agencies and private vendors in profit taking, which would leave users deprived of hard earned income.
By and large, given the huge sums involved – in the case of the Gauteng toll roads, about R20 billion – suspicion of profiteering, lavish lifestyles and corruption is foremost in the public mind. And, as COSATU points out, surely this money could have been used to improve our public transport system.
There is, as a result, a huge disjuncture between what is perceived to be a generous and somewhat healthy tax base alongside what is experienced on the ground as incompetence, mismanagement, corruption and wastage. In the end, the taxpayer has to bear both the burden of the cost of the service as well misdemeanors of state and private contractors.
Resistance marks both a vote of no confidence in state institutions and citizens’ pressure is an indication that people are not willing to carry the burden of payment of the costs if the status quo remains as it is.
To appease the public, the government will have to restore confidence that it is managing our roads well and that it has considered different options. Only then will public confidence grow and possibly also the willingness to chip in more for the payment of these goods.
But everybody has to play the same game. We can’t continue having penalties for one party with the other party having the freedom to make decisions without accountability, as has clearly been the case with the Gauteng e-toll saga.
SANRAL's Spiralling Road Downwards - Heads MUST Roll
Fakir, a well balanced article. What we now need is to go one step further and demand for heads to roll , like in Bolivia, for the utter waistage of R20 billion of taxpayers money our country can ill afford. Mr Alli of SANRAL and politicians have a lot to answer for as did Margaret Thatcher and the leaders that fell in the Arab Spring uprising. The tide is now moving south as accountability is inevitable
Ignorant Decision Makers
The people who plumped for e-tolling obviously were not aware of society's need for a good road system that is equally accessible to all citizens if there is ever to be a healthy society and a vibrant economy.