Gauteng to use new revenue strategy to tackle R17 billion Sanral debt

The Gauteng provincial government plans to use a new revenue enhancement strategy to pay the bulk of the R17 billion it owes the South African National Roads Agency (Sanral) for its Gauteng Freeway Improvement Project (GFIP) debt and interest following the scrapping of the GFIP e-toll system.

Gauteng MEC for finance and economic development Lebogang Maile told Moneyweb last week the provincial government will pay its 30% portion of Sanral’s GFIP debt and interest obligations, which amounts to R12.9 billion, but there has been a “minor shift” in that it will not raise money to pay this.

“We will raise money to invest in infrastructure because we want to see long term benefits. We want to raise money to finance the economy, not to finance debt,” he stressed on the sidelines of the tabling of the 2024/25 Budget Vote for the Gauteng Provincial Treasury.

Sanral debt

Maile cited the example of Gauteng’s plans to expand the Gautrain network and the huge benefit for the economy if that happened.

“We will rather borrow money from the bank to finance Gautrain because Gautrain will be able to pay that debt and Gautrain will also impact the economy,” he said.

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Maile said revenue generation is one of the focuses of the provincial government but indicated that details about this strategy will only be released later because “we are [still] busy with it”.

“We don’t want to pre-empt [this]. We are confident that we will be able to raise all that money. I can assure you it’s not going to bankrupt us.

“We have got a budget so we will make sure that we find the money in the budget. It’s going to come from our infrastructure budget,” he said.

Maile said in the 2024/25 financial year, the province received R155.9 billion in the form of transfers from national government, which comprises the provincial equitable share and conditional grants.

However, he said the provincial government also generated more than R8 billion in own revenue, which increased this budget to R163.8 billion.

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Without naming the Democratic Alliance (DA), Maile said one political party is claiming that the deficit on the 2024/25 provincial budget is R4 billion; however, he claimed the deficit is “just over R2 billion” and is as a result of “e-toll debt and not the mismanagement of funds”.

The remaining R4.1 billion of the total R17 billion owed to Sanral is for the GFIP maintenance backlog over a period of four years.

Maile said the provincial government is at an advanced stage of obtaining a loan from one of the credible financial institutions for the R4.1 billion “so we can deal with the maintenance now”.

“If we don’t maintain the roads, we will have to spend more later on.

“We will pay it because it is a loan like any other loan,” he said.

Minister of Finance Enoch Godongwana said in his 2022 mid-term budget that “to resolve the funding impasse” of the scrapping of e-tolls, the Gauteng provincial government had agreed to contribute 30% towards settling Sanral’s debt and interest obligations while national government would cover 70% of the road agency’s GFIP debt and interest obligations.

Former Gauteng finance MEC Jacob Mamabolo subsequently said in March this year when he tabled the Gauteng provincial budget that the payment by the provincial government of the R12.9 billion had been left to the new Gauteng administration to finalise after the general election on 29 May 2024.

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The agreement between National Treasury and the Gauteng provincial government led to e-tolls on the GFIP being switched off and scrapped at midnight on 12 April 2024.

Own-revenue enhancement plan

Maile said in his budget vote speech that in the current depressed fiscal environment it is necessary for the province to put more emphasis on increasing revenue collection to ensure that it maintains funding of key provincial priorities.

ALSO READ: E-tolls: Gauteng government to make first debt payment in September – Maile

He said in line with the “Gauteng Provincial Government Own Revenue Enhancement Strategy”, it will intensify the work currently underway with departments and municipalities to enhance own revenue collection in the province by implementing the following:

• Enhancement of banking initiatives for revenue collected to ensure motor vehicle licence revenue collected is immediately deposited and reflects in the provincial government fiscus;
• Pilot Driving Licence Test Centres (DLTCs), where the Department of Roads and Transport in partnership with the Road Traffic Management Corporation (RTMC) allows its Waterfall offices as well as Gauteng Management Agency (GMA) sites in Centurion, Midrand and Sandton to offer services, including driving licence testing, renewals, and professional driver permits;
• The expansion of smart DLTCs to 65 licensing sites in Tshwane, Ekurhuleni, Johannesburg, Sedibeng and the West Rand to improve service delivery;
• New casino regulations, which are about transitioning from a flat tax structure regime of 9% to a proposed flexible sliding scale tax structure ranging from 8% to 15% on gross gaming revenue levels;
• The Gauteng Gambling Board has issued nine new bingo licences as part of a strategy to infuse transformation in the industry by introducing new players from previously disadvantaged groups and as a form of revenue enhancement strategy; and
• An e-commerce/cashless rollout, which will allow liquor traders to view their bills electronically and make payments online through a mobile payment application.

Gauteng ‘now funding a national road’

Commenting on the R4.1 billion GFIP maintenance backlog, Organisation Undoing Tax Abuse (Outa) CEO Wayne Duvenage said Gauteng is now funding a national road that has already been financed by National Treasury.

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Duvenage said the provincial government cannot and will never be able to get money from Gauteng residents to pay off the Sanral debt because only local municipalities can send residents accounts and the two spheres of government have “totally separate competencies”.

He said there will be ramifications if Gauteng makes itself uncompetitive to other provinces in regard to vehicle licence registrations.

Duvenage said there was a disparity between the vehicle licence fees in Gauteng and the Eastern Cape several years ago – and corporates with large vehicle fleets and offices countrywide then registered the bulk of their vehicles in the Eastern Cape, saving millions of rands and Gauteng losing out.

He also questioned how improving service delivery brings in more money unless Gauteng wants to double the fees, which would be crazy.

Duvenage said Gauteng should be looking at how to decrease fees, adding that opening more DLTCs results in additional costs.

He said one always has to welcome and commend any government institution that is looking at enhancing its revenues, but stressed that this comes at a price to the consumer or businesses.

“What government needs to do is to start looking at how they do business at a lower cost to society or themselves so they can save money,” he said.

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Duvenage said if government wants to try and generate more revenue, it must not do it at a cost to business because they will just pass it on to society and South Africa will become uncompetitive as a country.

“The problem often is that so many of the people doing business with government are connected people.

“It is very difficult [for them] to go back to their own ‘chommies’ and say ‘sorry guys, but we can get these waste removal services, these clinic services, we can get this, we can that, all these supplies at 15% less’ because very often those deals are done with connected cronies,” he said.

“That is what has been the problem so often in this country.”

This article was republished from Moneyweb. Read the original here