Did you know that the SA taxi industry operates more or less tax-free? This incredible finding was outlined by the Organisation Undoing Tax Abuse (OUTA) CEO Wayne Duvenage. According to Stats SA, nearly three-quarters of the public (72.5%) use the SA taxi industry daily for transport.
As such, OUTA estimates minibus taxis generate R100 billion in annual revenue. And it operates while paying virtually no tax. Therefore, he argues if the SA taxi industry were to be formalised, it could finally help raise much-needed revenue for the state.
TAX-FREE SA TAXI INDUSTRY
“Formalising the SA taxi industry wouldn’t punish it. Instead, it would acknowledge that it’s a formal business and needs to be brought into the net,” says Duvenage. These comments echoed the view of the DA, which highlighted that minibus operators get away by being a largely cash-in-hand business, reports BusinessTech.
“The Minister of Finance has revealed that only approximately R5 million in tax is collected from the entire SA taxi industry. Therefore, the vast majority of taxi operators and owners are declaring no corporate tax income and not paying payroll tax for their employees,” explained the DA.
TAX EVASION
According to the South African Revenue Service (SARS), it is illegal to under-declare income and evade paying taxes. This is a crime under the Tax Administration Amendment Act, carrying hefty fines and a possible prison sentence of two years. Therefore, OUTA and the DA want to see SARS take action.
However, as anyone who’s used a minibus taxi will attest, taxi fares are typically only paid in cash, with no recipient or documentation given. It is therefore nearly impossible for SARS to establish how much money operators make. And, in turn, how much corporate tax they should pay.
SA TAXI INDUSTRY’S STANCE
Meanwhile, South African National Taxi Council (SANTACO) spokesperson Mmatshikhidi Rebecca Phala has the dismissed claims. She says taxi operators comply by paying personal income tax. “The SA taxi industry, in the main, is comprised of operators who run their businesses as sole proprietors. This means they operate and continue to be taxed as individuals,” she explained.
What do you think? Should SARS formalise the minibus industry or leave them be?
