Sars set to tackle R90bn taxi industry that paid R5m in tax in last year
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Cape Town - SARS will focus on the minibus taxi industry in the coming financial year as it embarks on a major compliance drive, revealed Finance Minister Tito Mboweni.
He was answering in a written parliamentary Q&A session, a question asked by DA MP Geordin Hill-Lewis. The MP wanted to know the total amount received from the industry and whether if Sars was concerned about tax avoidance in the cash-dominated industry.
“Sars collected approximately R5 million in corporate income tax (CIT), from taxi operators; however this amount includes tax collected from their employment income. This is because the industry does not correctly disclose income from taxi business on their CIT returns but included under a generic income source code. We were not able to determine income solely from taxi operations,” the minister said.
“Our analysis indicates that the majority of the taxi industry is declaring a nil return or are having a refund due to them.”
Last year, Bloomberg reported that the industry employs 300 000 drivers and generates an estimated R90 billion in revenue every year. Taxis are often the only option for workers in low-income areas as the nation’s bus system is limited and dilapidated passenger trains are prone to lengthy delays.
“Given its financial size, formalising the taxi industry is a vital step toward ensuring its contribution to the national tax revenue base,” said President Cyril Ramaphosa last year when he met taxi representatives and government officials.
Asked if he is not worried that Sars collects so little from a multi-billion industry, Mboweni said that Sars is concerned about tax avoidance across the tax ecosystem in general.
“This is more so in this particular industry. To this end, Sars is adopting a number of targeted interventions. The interventions are aimed at achieving the Sars strategic intent of building a tax and customs system that is premised on voluntary compliance.”
The South Africa National Taxi Council national spokesperson, Thabiso Molelekwa, said although Sars had not yet communicated its plans, his organisation was ready to engage on the matter.
“It is a coincidence that this comes shortly after we had a meeting where we concluded that we need to sit down with Sars and the ministers. It will be meaningless to do this if there no corroboration. There are contradicting laws that make it impossible to register vehicles by owners. We want to engage them on this and other matters like education and mobilisation. Sars is not disturbing us, this will give them an opportunity to explore their own government legislation.”
Economist Dr Lumkile Mondi said the minister was off-track with his plans.
“The minister of finance cannot resolve industrial policy issues through Sars. The SA government developed the Moving South Africa Policy Framework to integrate the commuter logistics value chain from home to work and back integrating taxi, bus, rail and aeroplane. This was underpinned by the Taxi Recapitalisation Programme. The South African government never implemented the policy instead destroyed all the key public institutions critical to this policy.
“It is the incompetence of the ANC government that has allowed this infrastructure to collapse, impoverished citizens with hunger and unemployment (32.5%) and inequality. Tito and his colleagues need to be voted out, a Sars option and enforcement will only lead to violence and the killing of many of the poor who are dependent on it since the ANC government has failed to provide universal transport services.”