A new report examining the financing of South African cities has recommended the introduction of taxes for private vehicle users in order to increase the available funds for costs related to maintaining transport systems.

The annual State of City finances report is a product of the South African Cities Network (SACN), which looks at the finances of the nine largest cities in the country and makes recommendations on how to address the systemic challenges within these cities. The cities under study were Johannesburg, Cape Town, eThekwini, Ekurhuleni, Tshwane, Nelson Mandela Bay, Buffalo City, Mangaung and Msunduzi.

According to the report, the actual marginal costs of drivers using the road are not reflected in SA’s current road use charges, arguing that above the economic costs of purchasing, maintaining and running, the use of private vehicles also increases:

  • road maintenance costs: vehicles cause physical degradation of and damage to roads;
  • accident costs: the costs of injuries and fatalities to individuals and property from road accidents, which are particularly high in South Africa;
  • congestion costs: overcrowded roads increase journey times; and
  • environmental costs: local noise and air and aesthetic pollution (ie despoiled landscapes).

“Although road pricing schemes aimed at private vehicle users have been designed and implemented around the world, formulating appropriate policies for taxing private road use is not straightforward because of social and external costs and intergovernmental relations,” the SACN said.

“Ideally, an efficient road-user tax charges each private road user for their precise social or external cost, but in practice this cost can only be approximately reflected by the available tax instruments.”

Furthermore, there is a risk that commuters and poorer road users might be inadvertently burdened with the increased costs of road travel if there isn’t an accurate understanding of who will bear the costs of additional road use charges and taxes, says the report. Since poorer households in South Africa are demonstrably more dependent on public transport, the SACN argues that the preferred option would be to tax private vehicles.

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The new changes proposed by the SACN include:

  • charges for driving in congestion-prone areas;
  • per km charges in specific areas, with higher rates for rush hour and less fuel-efficient vehicles;
  • charges based on either distance travelled or entering a cordoned area, in order to reduce pollution levels; and
  • a local payroll tax for all companies above a threshold of employees who are not housed on the premises or provided with transport.

Many of the recommendations are based on policies which have already been adopted in parts of the United Kingdom, France, Germany, Italy, Sweden and Singapore.