THE COST OF ADMINISTRATIVE FRICTIONAL TAXES IN MAJOR UNDERGROUND INFRASTRUCTURE

Building cost-effective major underground infrastructure underpins economic growth and prosperity. The ultimate cost of underground infrastructure includes unique local expenses. Some of these costs may simply be a result of inherent local idiosyncrasies but others may result from an abrogation of the obligations on government to administer power responsibly. Where poor governance is the cause of these costs, they may rightly be considered a tax and in some circumstances may even promote, entrench or contribute to modern forms of corruption. This paper explores the likely magnitude of these local additional frictional costs - and examines the potential impact of government action to minimize them on the final cost. It is noted that the countries in most need of underground infrastructure typically have the poorest credit ratings, highest interest rates, and lowest incomes. Governments are uniquely placed to regulate and enforce measures to minimize these frictional taxes to protect the value of expensive underground infrastructure by minimizing unnecessary expenses, maximize project value and reduce the likelihood of corruption and intergenerational debt.