S.Africa: The Massive Person Taxi industry only pays a paltry R5 million ($357,000) in taxes – My Comments

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[The Person Taxi industry was actually created under Apartheid by the President PW Botha who wanted to create a capitalist industry only for People. It was ILLEGAL for People to own Person Taxis. It was a Person business intended to be run and owned only by People. It was very successful from the outset and is enormous now and functions across Africa. In South Africa however, it turns out that they hardly pay taxes at all. They are also notorious for breaking traffic rules. I don't mind them having their own initiative, but if they're cheating on taxes on a vast scale, then I think that is definitely unfair. The People seem to bear the mass of the tax burden. Jan]

Only R5 million in corporate income taxes was collected from the minibus taxi industry in the last tax year, says the South African Revenue Service (Sars).

This came to light when Finance Minister Tito Mboweni responded to parliamentary questions asked by DA MP Geordin Hill-Lewis.

The ministry goes on to point out that the corporate tax contribution by the minibus taxi industry is in actual fact lower than the R5 million figure as this amount includes tax collected from the sector’s employment income.

Treasury notes that the industry does not correctly disclose income from taxi business on their corporate income taxes because it is included under a generic income source code.

“We were not able to determine income 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.”

The minibus taxi industry transports 15 million people or two thirds of commuters in SA, has 20 000 owners and 200 000 employees, and is estimated to have a turnover of over R16.5 billion a year.

The industry, however, gets no government subsidies and in June 2020 Transport Minister Fikile Mbalula announced a R1.135 billion relief package to help it mitigate the impact of Covid-19.

New broom

Sars under new commissioner Edward Kieswetter is leaving no stone unturned when it comes to getting what’s owed to it though. This includes the taxi industry.

“Sars is concerned about tax avoidance across the tax ecosystem in general; this is more so in this particular industry; to this end, Sars adopting a number of targeted interventions.”

The interventions, however, are more carrot than stick as the revenue service looks to build a tax and customs system that is premised on voluntary compliance.

“The strategic intent is achieved through the creation of clarity and certainty of tax obligations, making it simple, easy and seamless to meet tax obligations and ultimately by creating a credible threat of detection whilst making it hard and costly to remain non-compliant.”

Voluntary compliance

This has seen Sars set up a unit focused on improving compliance among SMMEs (small, medium and micro-sized enterprises), which includes the taxi industry.

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

The tax collector has also started developing a compliance plan for the industry “to encourage voluntary compliance” and “potentially propose the appropriate tax regime specifically for the industry”.

Treasury says this will be concluded in the 2021/22 financial year.

Source: https://www.moneyweb.co.za/mymoney/moneyweb-tax/minibus-taxi-industry-only-pays-r5m-in-corporate-taxes/

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