The_Unbeliever
Honorary Master
Where's my hoovercar? I wanna bypass the gantries! 
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The Gauteng E-tolling Thread
- Thread starter LazyLion
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1 - did you see the link I gave Sinbad? The risk is real. It is tangible. It is evidenced by actual data. It's not like it doesn't exist...
2 - we funded it via fuel levies, which if you see the data I linked to, was sustainable. Now such a funding model is becoming increasingly risky...
It is only risky if they don't plan to tax whatever other energy source is introduced and let's be real, it will be taxed.
Saying "we will tax whatever it is" does not make for a legally binding contract. They also cannot legally bind themselves to such a commitment. They also have no idea of the economic impact of such a decision, nor can they correlate something as iffy and non-binding as that to a specific cash flow model.
You do not deal in the fixed income market on such a basis...
So all around the world we will see all other governments also adopt this model to fund their infrastructure?
Or does this prove once more that a government should never consider this funding model for infrastructure.
It is becoming massively important to all other governments around the world, specifically for transport. There is considerable debate on the topic. Just research MBUF - https://www.google.co.za/search?q=m...10&es_sm=93&ie=UTF-8#q=mileage based user fee
Then check it for however many countries you choose and you'll see the discussion is worldwide. We were not ready for it. And it was implemented poorly, but it is an incredibly effective method upon which to fund infrastructure. Taxation is inefficient by its very nature. Ring-fencing fuel has massive risks on the funding side. Equitable funding from the national fiscus doesn't spread the economic benefits vs cost model very well. There will always be a loser in such a scenario. MBUF is a great concept and should costs come down to implement for transport; should it be totally corruption-free; and should it be the result of informed engagement with the electorate, then we have a great model to use.
In SA, it has been a complete abortion, from concept to implementation, to payment. It is completely wrong for us...for the time being while the payment base is so small.
As I keep saying though, what was needed was investment in proper public transport as a PPP deal, with the intention to reduce traffic on roads, and a small bond funded from fuel levies over a short period of time to pay for resurfacing.
But this government are useless and corrupt...
DJ... Makes a good point on the fuel levy I must say. At the end of the day though the biggest distinction between the two comes down to the current setup doubling the debt compared to the fuel levy.
With the levy, it would have gone to roads (in a perfect world...). Currently, it has to go firstly to the e-troll debt and only then into roads (in a perfect world once more...), and considering the e-troll costs are about as much as the planned road upgrades were to be, you get 1+1=2.
Might be mistaken on the debt of e-trolls, but from what I can remember it was about the same. Apologies if I'm incorrect in this statement.
With the levy, it would have gone to roads (in a perfect world...). Currently, it has to go firstly to the e-troll debt and only then into roads (in a perfect world once more...), and considering the e-troll costs are about as much as the planned road upgrades were to be, you get 1+1=2.
Might be mistaken on the debt of e-trolls, but from what I can remember it was about the same. Apologies if I'm incorrect in this statement.
My models show that if they were honest with us, they will need to increase by that amount or be bailed out. If they don't require it, then they have been lying to us about the payment split.
And when we talk about risk, we talk about risk to the investor. At the time of funding, price-points had not been set. Government had a fiduciary duty to their creditors to set the price-points correctly in order to sustain cash flow required to repay their debt obligations. So to an investor, the risk in this aspect is government actually doing their jobs properly...
MrGray
Honorary Master
I saw that link, and obviously cars will become more fuel efficient but it's not exactly an exponential curve besides which I don't understand why this has any bearing - surely govt can just set the percentage levy appropriately, so what if cars are end up doing 100km/l - if they still use fuel it can still be levied.
Then you completely negate the economic benefit of better economy. It becomes an altruistic purchase only. You also can't guarantee that you'll be able to hike the levy to such a correlated degree...
Sinbad
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Not true. Halve the consumption, double the levy. User still pays considerably less per km (levy is only a fraction of the pump price) and tax revenue remains the same.
The curve here is dependent on a few factors. It really is nitpicking. You cannot operate in the fixed income markets over such a duration on ifs and buts like this. You really can't...
Sinbad
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At the end of the day this shouldn't have gone near the fixed income markets anyway ;-) R6bn could have come out of one years budget. Oh wait, 5bn already did last year.
The were many ways the government could have mitigated risk. Imho this e-tolling Avenue is MORE risky than other things they could have done.
MagicDude4Eva
Banned
TBH a simple thing such as this: http://en.wikipedia.org/wiki/Vignette_(road_tax) has worked for many European countries - in Austria for example the annual contribution is sufficient to maintain the road network.
Debate is one thing, accepting it is another. We also aren't adopting a mileage based usage system which will treat all users equally, we are adopting one where some users have to pay, but others are exempt. We also aren't discussing a tolling system between major cities that people have to drive over a few times a year, this is a major road in the middle of two cities that has always been free that people have no choice but to use. Building a new road and taxing it is different than taking an existing road that people use on a daily basis and adding tolls to it.
How is the fuel levy not a mileage based user fee?
I guess, I just don't understand how the e-toll system can ever be considered as a fixed income provider. That concept is flawed in it's very nature. People will refuse to pay, can't refuse to pay the fuel levy. People will drive alternative routes, doesn't affect the fuel levy. People won't pay on a regular basis monthly, the fuel levy does. The fuel levy doesn't waste 20c per rand in operating costs.
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I think you're misunderstanding something here a bit. Fixed income market is the debt funding market. The fixed income descriptor has nothing to do with the cash flow side of things. It is a fixed income to the creditor. And a fuel levy is not a MBUF method. Just think about what MBUF means, and the fact that not all cars are equal.
Guys listen now, this is getting a little ridiculous. You can keep bitching about E-Tolling all you like, and I agree with you, but you're not going to win on the fixed income market bit. It's just no feasible to fund infrastructure in the debt capital markets with an unknown variable to such an extent to your cash flow. You just will not. You can disagree, but you'll be wrong. Actually let me rephrase my statement. Funding infrastructure in the debt capital markets with a massive risk factor to your primary cash flows would result in the cost of capital becoming so ludicrously expensive that it would probably make more sense to just print the damn money and accept the inflationary hit to the economy instead.
In the long-run, MBUF makes sense. As do a lot of methods of financing and paying for infrastructure. The fuel levy is slowly becoming a riskier and riskier method, especially if you fund from the market, and if you want to continue to argue that fuel levy should be perpetually used as the funding mechanism, then you'd better be prepared to start paying a considerable amount more than E-tolling cost us for future transport infrastructure development. That is simply the reality of the situation.
Alternatively government budget or reallocate for these projects, but our government are pathetic...
BUT...where have I ever supported our version of E-tolling? You seem to be confusing the matter somewhat. Just because I'm pro-MBUF does not make me pro-tolling? You've got to, just for a second, put down your defensive hat here. I have never, and will never support e-tolling in its current guise. If you've read my posts over the years, watched my videos, and read my material I've created you'll know this.
I do however support MBUF.
Let me pose two simple questions to you:
Will cars forever utilise traditional fuels as their energy source?
If you say no, then on what exact date will this transition take place?
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