Why do we pay Toll Tax in India when we already pay Income Tax, development tax (10 % of your flat's cost, if you can manage to buy one) and vehicle tax?
I am trying to understand the need of paying toll tax when am already paying my government for managing nation’s infrastructure?
The definition of development tax goes as: That as now you have bought a flat govt is supposed to provide roads to reach to your flat; these roads can’t be made without your contribution.
Tolls are not "taxes". Technically they are toll rates. The question raises an important issue - I pay road tax for my vehicle (state gov), and income tax on my income (central gov). What is the need to pay for passing through a highway when I am already paying the government for managing infrastructure?
Here are the relevant points:
· It is called as PCube - Public Private Partnership. The GoI and a private entity like L&T sign a concession document.
· As per the agreement, the private entity builds the infrastructure - road, port or even airports and other stuff in the future.
· For the current 5 year plan as much as $500B is going to be invested this way.
· The private entity is free to charge citizens for using the infrastructure - till they have squeezed enough from it. This part is a bit controversial as some times the transfer to public maintenance does not take place in a proper way. For instance in certain places the toll rates are still being collected even after the contract period is over.
· There are some leeways - two wheelers and GoI vehicles are usually exempted. By GoI vehicles, I mean public transportation. This again varies according to the MoU.
· This is a double edged sword. GoI based infrastructure maintenance is not exactly known for efficiency and infrastructure is not built in time. Essentially this is a free get away card and the government is happy to do this. Citizens on the other hand have to pay hefty amounts to use the infrastructure whereas public model does not aim to make a profit.
· The fact that very few people use it or that income taxes are not enough to build the infrastructure are irrelevant - it is possible to build the infrastructure and maintain it using public funds, but there are many reasons which work against doing so - the efficiency of public machinery < efficiency of the private entity and the public bodies like NHAI are already stretched to the limit.
· There are lot many highways without tolls - so it again has many factors. In the future, most of the infrastructure is being planned to be built this way. For better or worse, only time will tell.