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2/27/2008
China: Report Documents Illegal Use of Toll Road Revenue
Chinese government audit documents $3.2 billion in illegal tolls levied at the local level.

China National Audit Office
An agency of the Chinese central government reported today that municipalities have been collecting billions in illegal tolls from motorists. According to the China National Audit Office (NAO), drivers overpaid a total of 23.1 billion yuan (US $3.2 billion) through inflated fees, unauthorized toll booths and other irregularities. The country currently generates 510 billion yuan (US $71 billion) from tolls imposed across eighteen provinces.

In 1984, the Chinese government turned to tolling as a means of boosting the country's infrastructure. The tolls were used to pay off long-term construction debt for a transportation network comprised of 25,000 miles of new highway and 165,000 miles of secondary routes -- creating the largest toll road system in the world.

"For a long time, China's road infrastructure lagged behind economic and social development, creating a bottleneck," said NAO senior auditor Pan Xiao-Jun. "(Tolls) promoted economic development and improved the conditions that facilitate the travel of the masses."

The audit report found that government at the local level had taken advantage of this system for purposes other than paying off construction debt. Sixteen of the eighteen provinces surveyed had set up a total of 158 illegal toll booths that had collected 14.9 billion yuan (US $2 billion) in illicit revenue. In addition, eight regions raised tolls beyond the legal level, generating another 8.2 billion yuan (US $1.2 billion) and inspiring motorist outrage.

The audit also identified systemic management problems. Some regions artificially increased the size of the road construction debt so that they could continue to collect tolls over a longer period. Profits from a number of related revenue sources, such as roadside advertising, were diverted to purposes unrelated to debt repayment. Local agencies created their own overstaffed bureaucracies with personnel bringing in large salaries. For example, the Zhongxiang Bridge in Hubei Province could operate collect tolls with just 30 staff, but it employs 144.

As a result of the findings, the audit office urged the adoption of reforms designed to increase the number of free roads and to reduce the costs of operating toll routes. Thirty-four individuals have been disciplined or face criminal sanction for the irregularities uncovered.



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