Igor Levitin Finds Money on the Road
// Russian Ministry of Transport wants to collect 100 billion rubles from wayside cafes, shops, and gas-filling stations
The Ministry of Transport intends to find money for road construction and maintaining by establishing a tax on “joining” federal roads, just like a tax on hooking up to electric network. Transport Minister Igor Levitin suggested taxing all businesses which are located along federal roads and use them.
Speaking during the “government hour” in the State Duma on Friday, Transport Minister Igor Levitin suggested compensating the constant underfinancing of road construction by introducing a tax on “joining” federal roads. Only 1.5 percent of GDP (around 400 billion rubles) is spent on road building and maintenance, which is not enough. Meanwhile, the Ministry of Transport estimated that annual losses caused by the bad condition and underdevelopment of road network make up 6 percent of GDP, or 1.3 trillion rubles. The Ministry suggests finding additional financing by using the experience of another infrastructural monopoly, RAO UES of Russia, which established tax on hooking up to deficit capacities, which was actively supported by the government. The Ministry estimates non-tax sources of road construction at about 100 billion rubles. New tax might appear in the new law “About highways in Russia” which will be ready by March 2007.
Not only businesses located along roads, but many of those who use roads, will have to pay. Special taxes for foreign multi-tonnage trucks will be introduced. Such trucks damage roads a lot. The Ministry has been lobbying this idea for a few years already, referring to the experience of neighboring Ukraine and Belarus. New excise duties might be imposed on tires, which will be redirected for road construction purposes. Small wayside cafes, gas-filling stations, large shopping centers will all have to buy their “admission ticket” to the road. Minister Levitin explains the necessity of extra taxes by the fact that building driveways to the shops costs money, and the existence of shopping spots on the road often leads to traffic jams.
Insurance companies will have to share as well. A larger proportion of fees for the obligatory car insurance (OSAGO) will be transferred to increasing traffic safety. It was suggested to raise deductions from OSAGO (that is 5 billion rubles of deductions from the collected 50 billion rubles) ten times. According to the data of the Russian Union of Car Insurers, 54.1 billion rubles was collected in 2005, while insurance payments reached only 26.4 billion rubles. Meanwhile, insurance companies transfer 1 percent of OSAGO premiums to the interregional fund for traffic safety and treatment of car accident victims. Insurance companies are not ready to accept deducting 10 times more. “Shall we wait for Health Minister Zurabov too to make us transfer deductions for medical treatment of road accident victims?”, an insurance company member was sarcastic. “World practice has examples of financing road safety out of obligatory insurance premiums,” said NSG head Yuri Reshetnyak. “However, 10 percent is too hard a burden for these purposes.”
Owners of businesses that might become potential payers gave controversial feedback to Levitin’s suggestion. Thus, Anna Shiryaeva, director general of Magazin Magazinov consulting company, believes that “the Transport Ministry’s initiative can hardly influence the development of shops along federal roads, because the cost of driveway building is not so considerable in comparison to the cost of building shopping centers.” Rosticks Group corporation said they are ready to give money for good cause: “Hopefully, tax rates are reasonable, and one-time payment does not become a monthly tribute.” The manager of Mega shopping centers in Russia Herman Gewert does not cover up his disappointment: “I respect Levitin’s opinion and thinks he has his own reasons to suggest such initiative, but I cannot approve it. We already pay for access to the roads too often. Mega-Khimki shopping center, for instance, built the bridge and the interchange on Leningrad highway at its own expense, and then transferred it absolutely gratis into the ownership of the administration of the town of Khimki,” Gewert said. He believes the principle “you get more service for more money” should always be in force.
Small and medium business did not like the idea at all. “Introducing various payments for ‘joining’ and ‘connecting’ in Russia becomes like an epidemic. Meanwhile, we already pay for electricity and deduct taxes to road construction,” said Sergey Borisov, head of the Pillar of Russia public organization and president of the Russian Fuel Union. “By the way, when building a gas-filling station, for instance, the businessman is obliged to pay for building driveways and pays for rent of land to municipal authorities. If roadside territory becomes federal land – we’ll pay to federal budget as well. There should not be two outstretched hands, otherwise there will be no profits and no wayside service,” concluded Borisov.
Alena Kornysheva, Tatyana Grishina, Dmitry Kryazhev
All the Article in Russian as of Oct. 23, 2006
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