September 20, 2021

Government plans to subsidise taxis in South Africa – but there’s a catch

The Division of Transport plans to introduce a new ‘taxi subsidy’ as a part of a  broader give attention to making transport extra accessible in South Africa, says Transport minister Fikile Mbalula.

Answering in a written parliamentary Q&A, Mbalula stated that earlier than this subsidy is launched, the broader taxi trade will want to take steps in the direction of formalisation.

“The department is finalising the development of a public transport subsidy policy that seeks to locate subsidisation of the taxi industry within the wider, multimodal subsidy policy as part of the public transport funding reforms,” he stated.

“A number of different subsidy models are being explored for the taxi industry. The draft policy discussion document is now being consulted with key stakeholders.”

“Globally, direct public transport subsidy applies exclusively to formalised public transport services. Therefore, subsidisation of the taxi industry is dependent on the formalisation of the sector, and this is proving to be a major challenge,” he stated.


Knowledge revealed by SA Taxi proprietor, Transaction Capital confirmed that South Africa has 250,000 taxis working nationally in 2020.

These taxis are primarily in Gauteng (30%) and Kwa Zulu-Natal (21%), and every minibus averages 6,000km monthly, or 72,000km a 12 months.

Whereas taxis stay a ubiquitous type of transport for a lot of South Africans, they’ve additionally developed a popularity for rule-breaking, with the formalisation of the trade a troublesome activity given the scale of the trade and the rules that can want to be adopted.

Most just lately, the Nationwide Taxi Affiliation (NTA) stated that it might disobey South Africa’s new Administrative Adjudication of Street Visitors Offences (Aarto) and the nation’s new demerit system.

It stated the taxi trade doesn’t have the assets to adjust to the brand new system, which would require it to vet its drivers.

The affiliation stated that the system was a catastrophe for taxi house owners, who might lose their licences ought to their drivers obtain demerits for offences on the street.

Questions have additionally been raised concerning the tax paid by house owners and operators. Former finance minister Tito Mboweni stated that SARS collected roughly R5 million in Company Revenue Tax (CIT) from taxi operators in 2020. Nevertheless, this quantity contains tax collected from their employment earnings, he stated.

“It is because the trade doesn’t appropriately disclose earnings from taxi enterprise on their CIT returns but included underneath a generic earnings supply code. We weren’t in a position to decide earnings solely from taxi operations.

“Our analysis indicates that the majority of the taxi industry is declaring a nil return or are having a refund due to them.”

Mboweni stated that SARS is worried about tax avoidance throughout the tax ecosystem in normal – with the taxi trade seen as a level of rivalry. To this finish, SARS is adopting a number of focused interventions.

He added that SARS has a unit devoted to enhancing compliance of SMMEs, which incorporates the taxi trade.

“We had various engagements with the industry bodies in the year 2020/21 to create alignment as well as to educate. Furthermore, SARS has worked in collaboration with the Department of Transport to share data on work on their taxi industry transformation agenda.”

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