New Salik tolls could be key source of cash for Dubai

Emirate earned AED800m last year from road tolls, Salik branded stealth tax by residents
New Salik tolls could be key source of cash for Dubai
The gates, which charge drivers AED4 each time they pass through, were launched in July 2007 under a plan to cut down congestion on Dubai’s roads
By Shane McGinley
Mon 21 Feb 2011 04:01 PM

Dubai’s
Roads and Transport Authority (RTA) has refused to comment on media reports it plans
to add two Salik toll gates to the city’s roads, bringing the total number in
the emirate to six.

The
gates, which charge drivers AED4 each time they pass through, were launched in
July 2007 under a plan to cut down congestion on Dubai’s roads.

However, traffic in the city is nowhere near the levels seen
at the height of the oil and property-led boom in 2007 and 2008, when cars
regularly got stuck in traffic jams.

Emails
and calls by Arabian Business to the RTA went unanswered.

The
report prompted a flurry of responses from Dubai-based Twitterers, who branded
the move a stealth tax aimed at generating revenues from motorists.

“I just heard about those new Salik toll gates. I guess they want to
drive us back in recession,” posted Djvendettadxb.

“It was implemented to help or to rob
people?” tweeted Zzoher.

Philippe
Dauba Pantanacce, senior economist at Standard Chartered Bank, said the road
tolls formed a vital part of government cashflow.

“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,” he told Arabian Business. “It is also much more reliable than
hydrocarbon revenues for example.

“If you look at 2008, when oil prices were very
high, hydrocarbon revenues were higher than the taxes and customs revenues.
But, in 2009, when the oil prices plunged, taxes and custom revenues were 1.5
times higher than hydrocarbon revenues. So this can’t be neglected,” he said.

The global financial crisis has put increased financial
pressure on Dubai, which has an estimated debt load of $115bn or 123 percent of
GDP. The city relies on fees and taxes for around 77 percent of its budget
revenue.

The
RTA last year earned around AED800m ($217m) from Salik, up from AED776m in 2009
and AED669m in 2008.

Dhahi Khalfan Tamim, the emirate’s police chief, said in
January the government might look to raise road tolls but would stop short of
introducing direct taxes.

"There will be no taxes at all. If necessary [raise the] Salik [toll]. Not for income,
but to solve the heavy traffic problems,” he said.

The
RTA has struggled to secure funding for its infrastructure pipeline in the wake
of the downturn, delaying key projects such as the expansion of the Dubai Metro
lines.

In January, Arabian Business reported the agency would seek
private funding for almost a third of its large projects over the next five
years, in a bid to spread the cost and risk.

The RTA is also considering the privatisation of some of its
services, such as water taxis.

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