Mooted taxi subsidy ’to benefit workers’

Santaco’s KwaZulu-Natal provincial manager, Sifiso Shangase, said once in place, the subsidy would bring much-needed relief to the working class who were cash-strapped due to the present economic conditions.

Santaco’s KwaZulu-Natal provincial manager, Sifiso Shangase, said once in place, the subsidy would bring much-needed relief to the working class who were cash-strapped due to the present economic conditions.

Published Apr 12, 2021

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Durban - THE proposal to introduce a subsidy for the minibus taxi industry was welcomed as it would bring much-needed relief for the hard-up working class.

This was the reaction of the South African National Taxi Council (Santaco) and Cosatu, commenting on the recommendations made in the report on the Market Inquiry into the land-based public passenger transport sector by the Competition Commission.

In a report to the government, Commissioner Tembinkosi Bonakele called for an equitable subsidisation of the public transport sector so that it would also benefit the taxi industry.

Bonakele said minibus taxis were a major player in the public transport system in the country, carrying almost 66.5% of the country’s passengers each day.

Buses and trains transported only 23.6% and 9.9%, respectively – yet the former received the smallest slice of the state’s subsidy cake, he said.

In terms of the Competition Act, that was not fair to the industry, said Bonakele.

The recommendations have been shared with the Minister of Trade, Industry and Competition (dtic), Ibrahim Patel, for consideration and implementation.

Dtic spokesperson Sidwell Medupe said Patel had noted the report and would be studying it before making pronouncements.

Santaco’s KwaZulu-Natal provincial manager, Sifiso Shangase, said once in place, the subsidy would bring much-needed relief to the working class who were cash-strapped due to the present economic conditions.

However, Shangase warned the government to develop a well thought-out framework on how the subsidy would be rolled out, coupled with a thorough public awareness to eliminate confusion that could result in clashes among industry players.

“What we have always communicated is that this subsidy should be allocated in such a way that it relieves the working passengers. This then means that it may need to be directed for peak times such as in the morning and in the evening when workers are on the road,” said Shangase.

“In addition, there will need to be a check as to which routes have the highest concentration of working passengers, so that the subsidies can be aligned accordingly. Long-distance routes cannot benefit from the subsidy since passengers on these routes are not, in the main, travelling to work. So consultation and education should be conducted by the government together with passengers and taxi operators to avoid conflicts,” he said.

“The government currently does not have a subsidy policy which provides justification for some modes of transport being subsidised while others are not. The commission notes the effort by the government to change the subsidy framework through the development of the subsidy policy,” said Bonakele.

He said there was a skewed relationship between “ridership” levels and subsidy funding. For instance, minibus taxis only received 1% of the total subsidy in the form of capital subsidy (taxi recapitalisation).

He hoped the policy would address fragmented subsidies in the public transport sector to improve co-ordination and correct the skewed distribution of subsidies, adding that subsidies should be made on an equitable basis to benefit the taxi industry.

Cosatu provincial secretary Edwin Mkhize said the subsidy would be celebrated only when it was seen to be providing practical relief to workers.

“(Cosatu) has always campaigned for an efficient, effective and affordable public transport system, which is the mode of transport mostly used by workers,” he said.

“Taxis are the mode of transport that reaches exactly where the people live and work, even where other modes do not go, hence it should benefit from state subsidies.

“But we should caution that the system of government should ensure that relief is felt by the people on the ground who use the taxis. In any capitalist society, it is common that such subsidies can be viewed as an opportunity to make extra profit, which would then mean, the intended beneficiaries, who are the working passengers, then do not feel any relief,” Mkhize said.

University of Zululand economist, Professor Irrshad Kaseeram said in principle any form of subsidy distorted the pricing mechanism and made the economy inefficient.

“This arises because the true cost of the good or service is not being paid for by the user. It is being paid for in part by government via taxes and borrowing. This will encourage corrupt relationships between taxi industry and government.

“Moreover due to artificially low prices it will cause more people to use taxis thus distorting allocation of resources in the economy. It also prevents the taxi industry from becoming innovative to lower costs.

He added that it did not make sense to impose high taxes on fuel at one end only to subsidise it at the other.

The Mercury

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