There has recently been considerable publicity regarding the possible introduction of toll fees in Gauteng, with an announcement that Gauteng car drivers could be paying up to 66 cents per kilometre for the use of the new toll roads. Trucks would pay even more, while motor cyclists would pay less. The standard rates could be reduced in various ways – notably by acquiring an e-tag, or travelling in off-peak times.
Due to public concern, the Minister of Transport announced this week that a task team would be set up to investigate and reconsider the fees, but apart from the additional cost burden on individuals and companies, this new system would potentially create tax administration challenges. For example, it would be necessary to deal with the practicalities of claiming VAT on toll charges incurred by individuals travelling on business or by commercial vehicles. From a PAYE point of view, it would be necessary to deal with various situations, such as, what happens where an individual uses his company petrol card for paying toll fees? Such an arrangement is likely to give rise to an additional taxable benefit in the hands of the individual.
“Full details regarding the payment of toll fees are not yet available, and it will only be possible to determine what needs to be done from a tax administration point of view once this information is released. It is worth bearing in mind however, that toll fees form only one part of a complex web of taxes (and compulsory charges) payable by individuals and companies for the privilege of driving on our roads. For example, we pay VAT of 14% when purchasing a vehicle. We also pay a fuel levy equivalent to about 32% or 33% of every litre of petrol or diesel which we put into our cars.
“Then there is the carbon dioxide emissions tax imposed from 1 September last year. The rate of emissions tax payable depends on the fuel efficiency of your vehicle. There are certain very fuel efficient vehicles where no emissions tax is payable – for example the Toyota Prius or the Smart. At the other end of the scale you have thirsty vehicles such as the Jeep Grand Cherokee, where the amount of emissions tax comes to about 4.4 % of the value of the car”, explains Billy Joubert, Tax Director at Deloitte.
There is, of course, also tax embedded in the value of the price which we pay for motor vehicles. More specifically, most of our motor vehicles are imported and would have been subject to customs duty on importation. Even if we purchase vehicles manufactured in South Africa (for example a C Class Mercedes or a Three Series BMW), a significant portion of the content of the vehicle would have been imported and would therefore have been subject to customs duty. It is possible for motor companies to obtain partial relief from these liabilities for customs duties by utilising MIDP credits derived from exporting vehicles or other components manufactured in South Africa.
“It is therefore important to understand that, while toll fees may represent the most recent potential addition to the costs associated with using your motor vehicle, it is only part of a much wider picture”, warns Joubert.
Contact Billy at bjoubert@deloitte.co.za or visit the Deloitte Tax Management Consulting website.
