Revenues generated from speeding fines and the Salik road toll system are vital sources of income for the Dubai government, a banking economist said in response to calls by a leading Dubai businessman for them to be scrapped or reduced.
Earlier this month, Khalaf Al Habtoor, the founder of the Al Habtoor Group and one of the UAE’s most respected business leaders, said the revenue earned from by the Dubai government from the Salik system was “peanuts” and it should be scrapped as it added to companies’ overheads and discouraged them from setting up in the emirate.
Philippe Dauba Pantanacce, senior economist at Standard Chartered Bank, said “revenues from the Salik or road infractions fines can indeed not represent a substantial part of the revenue generation for the Dubai government.”
However, he believes it is a vitally reliable contributor to government coffers, especially in the current challenging economic environment.
He said: “Salik is an indirect tax through a toll system and in a country where there is no direct taxation, except in a few circumstances, any source of revenue is better than nothing. It is also much more reliable than hydrocarbon revenues for example.”
Dauba Pantanacce added: “If you look at 2008, when oil prices where very high, hydrocarbon revenues where higher than the taxes and customs revenues. But in 2009, when the oil prices plunged, taxes and custom revenues where 1.5 times higher than the hydrocarbon revenues. So this cannot be neglected.”
The RTA has only made around $451m from the Salik system since it was launched in July 2007 and Dubai police estimated in June that the revenue from fines only covered about ten percent of its expenditure.
While revenues from Salik and speed cameras are not substantial, Dauba Pantanacce added that in a country “with one of the highest death toll/capita ratio in the world, there are considerations that go way beyond the sole financial aspects.”
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