'Taxi industry is not opposed to taxation’: SANTACO breaks silence on SARS tax push - IOL

The South African National Taxi Council (SANTACO) has welcomed SARS’s decision to make the taxi industry a priority for tax compliance, but says the move is part of a formalisation process that has been underway for the past six years.

IOL previously reported that Finance Minister Enoch Godongwana warned that the South African Revenue Service (SARS) is stepping up efforts to broaden the country’s tax base, including by bringing more businesses in the informal economy and taxi industry into the tax net.

"SARS continues to broaden the tax base by improving registration, filing and payment, where tax compliance remains low. This includes the informal economy and the taxi industry," Godongwana said.

SANTACO spokesperson Mmatshikhidi Rebecca Phala said the announcement was not new to the industry.

She said SANTACO had been working with government and SARS since the 2020 National Taxi Lekgotla to formalise and corporatise the industry.

“Most taxi businesses currently operate as sole proprietorships, and individual operators contribute to tax in that capacity,” Phala told IOL.

She said one of the reasons the industry decided to pursue formalisation and corporatisation was to move towards a more structured business model.

This would allow taxi businesses to formally employ drivers, marshals and other people working in the industry, while giving them access to employment benefits and protections under South African labour laws.

Phala said the industry was already working towards ensuring that its tax contributions were aligned with the appropriate taxation regime.

SANTACO said it could not confirm the estimated R100 billion value of the taxi industry.

Phala also said the council was not able to provide an estimate of how much of the industry's income was currently captured within the tax system.

She said most taxi businesses operate as individual sole proprietors, making it difficult to measure the industry's overall tax contribution.

“One of the challenges with the current model is that it makes it difficult to quantify the industry’s overall tax contribution because taxi businesses are not yet operating under single, formalised corporate or cooperative structures and are therefore not contributing under the taxation regime that would apply to such entities,” Phala said.

However, she stressed that this did not mean taxi operators did not pay tax.

“It is important, however, to emphasise that the industry does contribute to tax. In fact, proof of tax compliance is currently among the requirements for an individual to secure an operating licence,” Phala said.

SANTACO said taxi operators mainly referred to individual vehicle owners whose names appear on the operating licences for their vehicles.

Phala said the industry's plan was for these operators to form cooperatives or other suitable formal business structures.

Individual drivers would be treated separately.

Once drivers are formally employed by cooperatives or corporatised taxi businesses, they would be registered and taxed according to their earnings and the applicable tax brackets.

Phala said the same principle should apply to anyone operating a business where there is a legal obligation to pay tax.

SANTACO said it supported SARS's efforts to bring non-compliant operators into the tax system.

However, Phala said the formalisation process needed to take into account the realities of the taxi industry and provide support to operators during the transition.

She said the current structure had also created challenges for operators in accessing some forms of funding and support, including skills development opportunities through the Transport Education and Training Authority (TETA).

"The industry has already acknowledged that its current tax structure can disadvantage it in other areas. For example, because operators are largely contributing as sole proprietors, the industry has faced challenges in accessing certain forms of funding and support, including opportunities for skills development through institutions such as the Transport Education and Training Authority (TETA)," she said.

"Corporatisation and formalisation are intended to address these challenges by ensuring that taxi businesses operate under an appropriate and recognised business and taxation regime. This can ultimately improve access to funding, training, employee benefits and other forms of institutional support."