The minibus taxi industry contributes to tax and municipal fees!

By Roane Swindon

Mention the word ‘taxi’ and many daily commuters will roll their eyes in disgust. Minibus taxis have a terrible public image, as some vehicles are not roadworthy, some drivers are irresponsible on the roads, and the media has painted them in a poor light because of sensational ‘blood leads’ reporting. This has led to a negative opinion of taxis, much based on assumptions rather than on fact.

As a result, many assume that taxis and their owners make no contribution to the economy, never mind contributions to tax, but while this may be true for a minority of minibus taxis, it is not so for the majority.

With around 200,0001 minibus taxis on South Africa’s roads, many of them form part of taxi association fleets and some associations are registered in part or entirely as companies. Some associations are excellent at bookkeeping, pay their taxes, keep an eye on their vehicles’ conditions, and sign transport contracts with other businesses, while a few are informal and operate without formal public transport licences.

In order to transport passengers for an income in South Africa, drivers are required to have professional driving permits, in addition to ordinary driving licences2. Taxi drivers must go through regular applications for licences, first applying for their Learners’ at a cost of around R170, then applying for their Drivers’ Licence at around R240. Licences must also be renewed at a separate cost, with fees differing between provincial governments3.

Professional Driving Permits are also required and are only issued to registered taxpayers who have provided their Letters of Good Standing. These permits cost around R300. Permits are also only renewed after a tax clearance is performed.

All vehicles in South Africa must be licenced with the provincial department in which the owner of the vehicle resides. Depending on the weight and passenger count of the vehicle, new taxi licences cost upwards of R170. Licences are renewed annually and cost around R612 for minibus taxis. If the licence is not renewed timeously, owners face penalties and arrears payments.

Before a renewal will be granted, the taxi needs to be checked for safety once a year, and receive a Certificate of Fitness at a cost4.

Tax in the form of VAT is also paid through taxi vehicle purchases, regular services (at least five a year), new tyres at least once a year, and replacement part purchases, as well as panelbeating and other maintenance5. In addition, minibus taxis make a large contribution to the fuel levy added to petrol sales. According to IOLNews, in 2014 the national fleet spent around R68 million on fuel daily, and around R20 million of that was tax, excluding contributions to the Road Accident Fund6.

The question for many though is how many taxi drivers are legally licensed with the correct permits? How many taxi vehicles are legally licenced and in possession of roadworthiness certificates? The questions come as some illegally-operating taxis do not follow the rules of the road, making a poor impression on the industry as a whole7. However, according to the South African National Taxi Council (SANTACO), around 130,000 of South Africa’s 200,000 taxis are operating legally8, that is, with all the required documents, making legal operators who pay for their licences a majority. However, even illegally operating taxis contribute to tax through VAT and fuel purchases.

References:

1 ‘South Africa Opens Second Minibus Taxi Assembly Plant’, Economic Development Department; 13 November 2012. http://www.economic.gov.za/communications/50-media-releases/175-south-africa-opens-second-minibus-taxi-assembly-plant

2 ‘Professional driving permit’ http://www.gov.za/node/727518

3 ‘Transport Requirements’ http://www.roadsandtransport.gpg.gov.za/services/Documents/Transport%20types-%20Requirements%20-2016.pdf

4 ‘Roadworthiness certificate’ http://www.gov.za/services/roadworthiness/roadworthiness-certificate

5 ‘How Minibus Taxis Contribute To The Economy’ http://www.taxinomics.co.za/2017/07/03/how-minibus-taxis-contribute-to-the-economy/

6 http://www.iol.co.za/saturday-star/taxis-a-mirror-to-sas-dark-side-1737856

7 ‘Cape Town clamps down on illegal taxis’ http://www.news24.com/SouthAfrica/News/cape-town-clamps-down-on-illegal-taxis-20170621

8 SANTACO History http://www.santaco.co.za/santaco-history/

 

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