The Road Freight Association (RFA) welcomes Finance Minister Enoch Godongwana’s 2026 Budget speech announcement that R20 billion that the government had planned to take from individual taxpayers has been dropped.
This is only due to the commodities boom that has saved our necks. The question remains as to whether that boon will still go into the deep, dark pit of government spending.
Both personal income tax brackets and capital gains tax have had thresholds raised in terms of inflation – a good sign and another relief for citizens.
More importantly: asset disposals for small businesses will be exempted to a maximum of R15 million. Small, Medium and Micro Enterprises make up 80% of our Association: this exemption is vital for their sustainability and growth.
Similarly, VAT and turnover taxes will also be raised for micro businesses to take into account inflationary pressures – a huge ‘win’ for another portion of association membership. This means businesses have a fighting chance to grow – something we have debated and discussed with various government departments at length over a decade, at least.
Levies and other taxes
The largest levy faced by the road freight sector is the ‘general fuel levy’ – yet there are a plethora of so-called ‘stealth taxes’ in vehicle sales (carbon taxes), more visible tolls, licence fees, permits and special tariffs for special operations, municipal compliance and registration tariffs for ‘dangerous goods – both transported and warehoused’ and parking and special-use areas (within local authorities).
The problem is the word ‘general’. The levy goes more to other aspects of government expenditure than to the infrastructure ‘used’ by fuel buyers. Is that not what it is – a ‘user levy’? In the main, allocated funding from the ‘general fuel levy’ has been reported to not being used for road infrastructure, but for other ‘more urgent’ priority issues such as education, water and electricity and health requirements. Perhaps not (in themselves) incorrect – but the deterioration of general road networks not under the domain of the SA National Roads Agency (Sanral) has been noticeable.
The general fuel levy is being raised again – 21 cents per litre for diesel – the impact of which may not be felt right now, as the international price of crude oil has continued to drop. One of the reasons given for the increase is the Road Accident Fund (RAF). The RAF has this incredible capacity to absorb and consume vast quantities of taxpayers' money – without really offering anything in return.
State-run logistics
In his Budget speech Godongwana noted: “In logistics, we are dismantling bottlenecks in rail and ports that have throttled exports and raised the cost of doing business. Our intention is to bolster public-private investment in rail operations while retaining state ownership of rail infrastructure. The objective is to move goods faster, cheaper and more reliably.”
There are a number of hurdles with this approach – not the least as to whether moving freight by rail will be less expensive than by road (we know that in most cases, there will still be road freight legs before and after the rail links).
In addition, with Transnet still owning the infrastructure and operating (trainsets) on the same rail routes: how will the private sector be guaranteed a fair chance when it becomes obvious they are out-performing Transnet?
If we quote the phrase ‘Operation Vulindlela’ enough – will that ensure efficient implementation and operation? Just like the unbundling of Eskom, the time has come for Transnet to be privatised, or have route concessions just like toll-roads, for any real change to occur. Transnet cannot be the referee and a competitor at the same time.
Recently, there have been some opinions in the media about the actual profitability (and real cost savings) of rail transport. The clincher is consistent volumes across a reliable and dependable rail system: continuous volumes, reliable scheduling, sustainable train capacities and secure cargo across the whole rail offering.
Public-private partnerships
It’s very clear from the budget proposals that government is placing more and more responsibility on traditionally tax-funded infrastructure projects at the doorstep of private business – albeit through public private partnerships (PPPs.)
Some of these projects – high speed (passenger) rail links between Gauteng and Limpopo and KwaZulu-Natal, and even within the Gauteng ‘mega-metropolis’ concept – are not what the country needs right now. Are these vanity projects, or opportunities for more that loyal cadres can feed at?
The criminal prosecution system is teetering on the point of collapse. Look at the current commission of enquiry, service levels at local police stations, rates of prosecution through the courts – the cases need to get there first – and the rampant operations of various mafias within specific sectors and industries. With the sugar industry on the verge of collapse and media reports suggesting over 50 000 jobs are at risk, should this not be a higher priority than building a high-speed rail link?
The logistics network needs direct investment – and the role of private players needs to be understood, welcomed and protected from state ravaging and misuse. Is that possible?
Partnerships should be levered to ensure that compliance, fairness and sustainability are supported. The road freight sector is ravaged by those who choose not to follow the prescripts of the Labour Relations Act, the National Road Traffic Act and other key bits of legislation that create a fertile playing ground for those who wish to operate illegally.
The symptoms are poorly maintained vehicles, undocumented foreign drivers, bad driving habits and manifold corruption.
PPPs must focus on ensuring all have fair access to well-maintained infrastructure, play by the rules and contribute fairly to state and business development.
Focus on efficiency
The Association notes that the general financial standing of the country is improving – which should not be scoffed at.
However, it’s time that the government acknowledges it is not in the game of logistics and that this should be left with private-sector business experts in the field, as has been proven time and again.
The state is there to ensure compliance with the rules, allowing all to participate fairly and freely in the sector.
Now is the time to sort out dilapidated roads through the fuel levy – not just to refer to ‘infrastructure projects’ at local and regional levels – or to note that Sanral will maintain a very defined set of roads. Sanral cannot be responsible for all roads.
Together with this approach, we should concession key rail links – much like toll roads – and ensure that the endpoints of these routes, whether ports or land borders, can handle volumes efficiently and effectively, with capacity for growth.
We are already losing volumes through Beitbridge and the Port of Durban to other ports in the African sub-continent due to the poor operation of our assets.
