Economic Highlights

New Delhi, 21 January 2011

Toll Tax Levy

STATE SANCTIONED LOOT 

By Shivaji Sarkar

Indians need to learn from Chinese farmer Shi Jianfeng, how not to pay toll tax and the Government has to learn about the simmering public discontent over it. Not so long ago, truckers all over India had gone on strike protesting against it.

There would be many legalists who might question Jianfeng’s evasion of State levied toll – dictionary equates it with tax – by putting on false military vehicle license plates for his two vans in Yuzhou, Henan province for many years. The legalists would be happy to note that he was sentenced to death and told to pay a fine of 3.68 million Yuan, $ 558,000.

That is where the happiness for imposing State’s authority in the most autocratic nation should end. It led to a public furore. People came down literally on roads, leading the public prosecutors to retract and the court acquitting Jianfeng. Plainly, the State learnt it might create legal sanction for toll but it was blatantly immoral. Also, if the people protested it could backtrack.

Indians may not emulate Jianfeng but they all want to be like him as the toll on national highways, now superficially renamed expressways, are becoming an oppressive tool to bolster profits of some people, whose investments are minimal. It is yet another kind of corruption, with the sanction of the State, to create private empires.

Moreover, the toll roads in India have contributed enormously in adding to inflation. How much toll is collected throughout the country is not exactly known because there are many agencies which collect it. But the National Highway Authority of India (NHAI) has alone been making phenomenal profits.

It has collected toll revenue of Rs 1,702 crore in 2008-09 exceeding its target of Rs 1,681 crore. As it had done in 2007-08 when it netted Rs 1,415 crore against the target of Rs 1,350 crore. The reason for exceeding the target was to extend toll to many existing roads and addition of new toll plazas. Thus, various agencies, private operators, State Governments and civic bodies, as per a rough estimate would have collected double this amount.

Worse, the burden is finally passed on to the consumer and it makes all goods dearer and delays travel time. This virtually beats the concept of jam-free roads. Some states like Uttar Pradesh are developing expertise of virtually levying toll on all State roads. Many of these have been leased out for 30 or more years to private groups.

The NHAI have further fine-tuned the fleecing mechanism. Though it or any concessionaire has hardly to shell out any extra money it goes on increasing toll rates all through the year as they assert it is linked to the wholesale price index (WPI). The NHAI increases toll rates by 8 to 10%, sometimes more, every year. And its profit as also of all private concessionaires swells leading to inflationary pressure.

Are the NHAI methods justified? Arguably, toll has been levied on new roads and bridges for ages to recover the cost. However, once the cost was recovered, the practice was to stop the collection. But today the cost being termed “investment” has changed the basic approach to public welfare. Someone investing a peanut is allowed to amass enormous wealth for 30 or more years.

It has been seen that it does not take very long to recover the cost. Unlike decades ago, when it took four to five years. But then the toll was extremely minimal, in some cases only 50 paisa or even less.

Now with a phenomenal increase in the toll rates, from Rs 20 to over Rs 150 per trip at one toll point, in most cases, it is recovered in about three years. In some instances, the rates are more. For example, the Delhi-Noida toll bridge recovered all its costs within three years but it continues to collect toll amounting to more than double the cost.

In a response to an application filed under the Right to Information Act by Sapna Patel of Thaltej, the NHAI executive engineer at Ahmedabad informed her that while the total cost of construction (of the bridge and the link road) was Rs 15,1454 crore, the authorities had collected Rs 31,8124 crore from tax between February 15, 1998 and June 1, 2006!

True, toll roads are one way of keeping them efficient and relatively free of heavy traffic, but even here with different results from country to country. Often Indians are made to believe that it is an accepted international, western, practice. Nothing could be farther from truth than this. There are countries like Germany with toll-free expressways.

The US has the lowest rates, often 50 cents and mostly restricted to bridges or subways. The western Governments have learnt that toll plazas create jam, delays traffic and add to their fuel bills. Free movement on highways save the State enormous sums and help the public in accelerating economic activity.

Pertinently, the Government had promised reduction of travel time on toll roads. Initially it was so. But now if one wants to go from Delhi to Chandigarh one has to spend not less five hours travel time against the promised three hours. It takes over six hours to reach Jaipur against the promised four hours.

Scandalously, every car owner has to shell out Rs 250 to Rs 300 for travelling one way as toll. Trucks and buses pay almost double. In most cases, the maintenance of roads and bridges has not improved as commuters of Vadodara-Surat often complain. Besides, the NHAI conceals facts about mishaps.

Recall, sometime back the Transport Ministry held a discussion about doing away with toll tax.  But the NHAI and its concessionaire prevailed upon the Government. Clearly, the time is ripe for a rethink as another all-India strike by truckers is being discussed. Besides, people everywhere are discontented over the atrocious toll rates.

Undoubtedly, nobody is against development. But it has to be growth of all and not the so-called “investors”. The whole concept of levying toll tax, which has too many deleterious effects --- increase in prices, delays, loss of fuel needs to be reviewed. If at all toll tax has to be levied, it should be for a limited period, about three years on a particular stretch of road. It should not be State authorised plunder in perpetuity. ---- INFA

(Copyright, India News and Feature Alliance)