Israeli Toll Road Overcharged Drivers by $40.9 Million

Since Route 6 was opened in 2004 to the present the collection rate has been reduced five times - by more than 90 percent - after it turned out that it was excessively inflated to begin with.

Send in e-mailSend in e-mail
Send in e-mailSend in e-mail
Route 6: Fees vary depending on how many interchanges you pass through.
Route 6: Fees vary depending on how many interchanges you pass through. Credit: David Bachar

The transportation and finance ministries dragged their feet and enabled the Highways Management Corporation (Derech Eretz) to collect excessive fines from drivers who were late paying their bills.

The State Comptroller’s report says that instead of insisting that the fines be refunded, the ministries accepted a controversial compromise with the corporation to invest the overpayments in lighting.

The comptroller wrote about this failing already in 2011, but now it transpires that nothing has changed and the corporation has continued to overcharge drivers.

In recent years the corporation has collected in excess of 156 million shekels from drivers who were fined for late payments, the report finds. The excess payment was caused because the state was late updating the franchise owner’s collection rates, and set a lower rate than the one recommended by professionals. Consequently, the corporation has accumulated excess funds of millions of shekels every year from overcharging drivers.

The fines imposed on late-paying drivers are intended to compensate the corporation for the late payment and cover its expenses for the tardy collection. The sum collected at the end of the year is supposed to be congruent with the corporation’s collection expenses that year.

If the sum is higher, the governmental corporation is supposed to reduce the fine the following year accordingly. This regulation was intended to ensure that the corporation does not profit from the debt collection.

Since the toll road, Route 6, was opened in 2004 to the present the collection rate has been reduced five times – by more than 90 percent – after it turned out that it was excessively inflated to begin with. But every time it was reduced too little. In addition, the reduction was late by 2-4 years and in the meantime the corporation collected and accumulated the difference at the drivers’ expense.

The corporation failed to separate its accounts so as to enable fine-collection expenses to be isolated from other operative costs, resulting in legal and economic brawls with the state. By the time the corporation finally reduced the rates, it had overcharged drivers again and again, accumulating the money.

In 2011 the comptroller found that the Transportation Ministry took a lenient approach and ordered the corporation’s income to be reduced by a lower sum than that recommended by professionals. Now it appears that the Transportation Ministry and treasury continued to drag their feet in updating the regulations in the following years as well, enabling the corporation to enjoy the excess funds.

The comptroller accuses the ministries of improper conduct, red tape and delays. “Due to this conduct, recommendations were not applied, updating compensation funds and refunds was delayed considerably, while the excess funds continued to accumulate,” the report says.

Click the alert icon to follow topics:

Comments