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  HOME | Business & Economy (Click here for more)

Russian Trucking Industry Feeling the Bite of Controversial Road Tax

MOSCOW – A road tax introduced by Russia early in 2017 that targets heavy and long-haul trucks continued to rumble on Friday, causing discontent among those in the trade, a freight company spokeswoman said.

Russia’s contentious Platon road tax imposed on heavy, long-haul trucks that sparked protests by truckers across the country, has begun to squeeze out smaller operators from the market, according to the Lithuanian-based freight forwarding company ABIPA.

“It is difficult for many freight forwarding companies to make a profit,” ABIPA Commercial Director Natalia Kuzovkina said.

The Electronic Toll Collection (ETC) system was levied in November 2015 as a way to raise state funds to maintain and improve roads.

In April this year, the Kremlin hiked the Platon ETC rate 25 percent to 1.90 rubles (0.03 euros) per kilometer.

The implementation of Platon has led to allegations of corruption by the opposition, since the management of the system, including the collection of payments, is carried out by a company controlled by Igor Rottenberg, son of billionaire Arkady Rottenberg, a member of Russian President Vladimir Putin’s inner circle.

Both the introduction of the tax and its subsequent increase sparked protests, with police breaking up a strike outside Moscow earlier this year by desperate truckers who claim that the tax will eventually strangle small and medium-sized companies and leave only the big monopolists standing.

APIBA, which monitors the industry and operates extensively in Russia and the Russian Commonwealth (CIS), said in a statement that the road tax has led to a 10 percent decline in the number of operators in the sector while contributing 27 billion rubles (400 million euros, or $458.5 million) to the government’s Road Fund of Russia.

“The situation is made worse by the presence of sketchy schemes on the market, due to which the freight forwarding services are actually underpriced,” Kuzovkina added.

ABIPA says the toll charges are not great in comparison to other costs, but the additional fees are “painful” considering that “85 percent of Russia’s transport is acquired by means of leasing. Small businesses suffer the most.”

Kuzovkina said she didn’t expect the situation in Russia’s transport industry to stabilize anytime soon, meaning long-haul truckers there are likely to continue to feel the crunch of the Russian recession and lash out.

“Even if the Platon ETC is canceled altogether, will it solve all the problems of the freight forwarding industry? Unlikely,” Kuzovkina said.

 

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