Tax regime proposed for the taxi industry

THE revenue collector plans to propose a special corporate income tax regime for the taxi industry, Finance Minister Tito Mboweni has revealed.

It is an open secret that taxi owners barely pay corporate taxes to Sars.

The National Taxi Association (NTA) has defended the tax non-payment, saying it enables the industry to charge commuters “charity fares”.

Replying to written questions in Parliament, Mboweni said the government was concerned about tax avoidance in the taxi industry. Sars collected about R5million in corporate income tax and employment income tax from the taxi operators, revealed Mboweni.

This was clearly a pittance from an industry that generated a turnover of R35billion annually. The SA National Taxi Council (Santaco) divulged this figure to Parliament in 2017.

Mboweni said taxi bosses did not correctly disclose income from their taxi businesses on their corporate income tax returns. “Our analysis indicates that the majority of the taxi industry is declaring a nil return or are having a refund due to them.”

Sars was working toward a plan to address tax non-payment in the minibus sector, said the minister. A special tax regime for the sector was being explored, he added.

“In response to the perceived noncompliance by the taxi industry, Sars is developing a compliance plan for the industry to encourage voluntary compliance and potentially propose an appropriate tax regime specifically for the industry.

“This work will be concluded in the 2021/22 financial year,” said

Mboweni. He was replying to questions by the DA’s Geordin Hill-Lewis, who asked if Sars was concerned about tax avoidance in the industry. The DA said Mboweni’s reply proved that the majority of taxi owners declared no corporate tax income at all.

“The DA calls on Sars to act against tax dodgers in the taxi industry, to ensure that this very lucrative industry pays its fair share,” said the party.

“We will not be able to fix the state, or repair government finances if entire profitable industries just boycott paying tax. We call on Sars to brief Parliament as soon as practically possible.”

Theo Malele, spokesperson for the NTA, said the industry’s non-payment of corporate tax benefited commuters. They would face steep fare hikes if things changed, and the government still did not subsidise the sector, he said.

“The taxi industry is charging charity fares. We don’t charge marketrelated prices primarily because we’re serving an unsubsidised and marginalised market,” Malele said.

“Right now, the commuters are benefiting. If we’re expected to pay tax, we would have to up what we charge commuters.”