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Court actions no solution to e-toll dilemma

07 May 2012   (0 Comments)
Posted by: SAIT Technical
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By Matthew Lester (Tax Talk 6 May 2012)

Over the past two weeks the Sunday Times has featured articles by Archbishop Emeritus Desmond Tutu and Finance Minister Pravin Gordhan appealing for cooperation and leadership to address challenges facing South Africa.

There were cheers when the implementation of the Gauteng e-toll system was blocked by an interdict. But that's not the end of the saga. This will be followed by more delays and review proceedings.

Meanwhile the interest bill for the government on its R20-billion loan to build the highways is running. And Gauteng is enjoying new free highways when it already has 50% of the wealth but only 20% of the population to support.

Gordhan cannot increase the fuel levy until budget day in February 2013. So the government gets stiffed with an unbudgeted cost.

Some say that another few billion is peanuts in the scheme of R1-trillion in state expenditure. Not quite. The cost is unbudgeted so it gets added to the national debt.

The national debt level has been very carefully balanced for 2012/13 at R152-billion or 4.6% of GDP. This level cannot be exceeded for fear of international rating agency reaction and the resultant effect on interest rates.

Meanwhile we are not hearing much positive news on the economy. Will the R33-billion in additional transaction taxes budgeted for 2012/13 happen? If SARS comes up short, the resultant national deficit will have severe consequences for all South Africans.

Think ahead to budget day 2013/14. Gordhan will have to find an extra R100-billion from taxpayers, just to keep on track. It will be difficult, as Gordhan did this year, to stiff a third of that burden to individual taxpayers by way of increased fringe benefits tax, increased CGT inclusion rates, or dividend tax. Those bullets are spent.

Tutu and Gordhan are calling for solutions. Interdicts and reviews are delays not solutions.

Nobody is right in the Gauteng toll road saga. The government rushed and stuffed up the procedural process. And the opposition came far too late. There will be no winners by pursuing it all through the courts or waiting to shove it onto the fuel levy next year.

Let's lock up all the players in the toll road saga until they find a settlement.


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