South Africans filling up with petrol and diesel hit with double tax

South Africans who already pay taxes for road maintenance are increasingly being taxed twice as the number of tolled roads continues to rise across the country. 

The increase in tolled roads comes as provincial governments are increasingly pushing a larger share of the country’s transport network into the hands of SANRAL for maintenance. 

South African municipalities and provincial governments are characterised by high levels of mismanagement and inadequate revenue collection. 

This puts them in a poor financial position to invest in upgrading or maintaining the parts of South Africa’s road network under their authority. 

As a result, Transport Minister Barbara Creecy has revealed that more than 13,000 kilometres of provincial roads have been handed to SANRAL since 2013. 

Creecy warned that this is unsustainable and could lead to more widespread tolling in South Africa under SANRAL’s current operating model. 

The Organisation Undoing Tax Abuse’s (OUTA) executive manager, Julius Kleynhans, explained that this is effectively a form of double taxation on road users. 

This is because motorists already pay various taxes intended to fund road maintenance and upgrades that are levied on petrol and diesel at the pumps. 

“It is double taxation because provincial roads have deteriorated as a result of a failure of provincial governments to use their resources properly,” Kleynhans told Newzroom Afrika. 

“You need to understand where the money has come from. It is from taxes on the taxpayer, fuel levies, licence fees, and existing tolls.” 

South African motorists fund road maintenance largely through the General Fuel Levy (GFL) that is imposed when buying fuel at the pump. 

This levy is a general tax levied on every litre of petrol and diesel sold in the country, which was intended to fund road maintenance. 

However, the funds generated through this levy have never been ring-fenced for a particular purpose, with it flowing into the National Revenue Fund. 

This means the state can use it however it likes, with the revenue increasingly being used to prop up the government’s deteriorating finances. 

The GFL is relatively easy to administer and collect, which makes it very attractive for the state to increase and use to plug fiscal gaps. 

Over the last decade, South African motorists have paid over R750 billion worth of tax under the GFL, with a declining share of it being used for road maintenance. 

Triple blow for motorists

The increased payments from motorists to the national government, through the GFL and tolls, are not the only outcomes of increased mismanagement and a lack of maintenance. 

Kleynhans explained that motorists are also paying more to maintain their own vehicles as South Africa’s roads become increasingly poor. 

This ranges from basic maintenance, such as replacing a tyre after hitting a pothole, through to severe damage to suspension components, driveshafts, and other parts of a car. 

There is also an indirect cost being borne through the need to purchase cars that can handle the punishment dished out by South African roads. 

“It is evident in most communities as you drive off the national highways that the road infrastructure is not up to scratch,” Kleynhans said. 

This is compounded by the increased damage to South African roads from a rise in road freight as the country’s rail network effectively collapsed over the past decade. 

As more freight is transported via road, when the infrastructure was not designed for such a purpose, it requires additional maintenance and suffers more damage. 

“Due to the lack of proper freight infrastructure and a deterioration in alternative transport methods, this has become a severe issue,” Kleynhans said. 

“Just the trucking has had such a negative impact on our smaller communities and less-used roads that are just not maintained.” 

Kleynhans explained that adequate maintenance and upgrades to the existing road network will not only drive economic growth but potentially drop the cost to the government of its various programmes. 

Improved road quality and a wider range of alternatives will reduce the burden on the Road Accident Fund (RAF) and existing toll roads, helping the state to save money. 

The RAF is funded through a separate levy imposed at fuel pumps to the tune of around R45 billion a year. 

Acting effectively as a compulsory third-party insurance premium for everyone using South African roads, the RAF has been plagued by rising claims and severe financial mismanagement in recent years. 

As the country’s roads continue to deteriorate, a rising number of claims are instituted at the RAF, leavin ti with an outstanding backlog of over R380 billion.