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R90bn taxi industry only paying R5m in taxes

Independent Online (IOL) logo Independent Online (IOL) 2021-05-12 IOL Reporter
a van parked on the side of a road © Provided by Independent Online (IOL)

Cape Town – The DA wants the government to act against tax dodgers in the taxi industry, calling on the SA Revenue Service (Sars) to brief Parliament on how it intends to bring them to book.

In reply to a DA parliamentary question, Minister of Finance Tito Mboweni has revealed that only about R5 million in tax is collected from the entire minibus taxi industry, which has an estimated turnover of R90 billion per annum.

However, the R5 million includes tax collected from their employment income.

“This is because the industry does not correctly disclose income from taxi business on their CIT (corporate income tax) returns but included under a generic income source code. We were not able to determine income solely from taxi operations,’’ Mboweni said.

’’Our analysis indicates that the majority of the taxi industry is declaring a nil return or are having a refund due to them.”

This while the minibus taxi industry is demanding government subsidies, DA finance spokesperson Geordin Hill-Lewis pointed out.

’’The DA calls on the South African Revenue Service (Sars) to act against tax dodgers in the taxi industry, to ensure that this very lucrative industry pays its fair share,’’ Hill-Lewis said.

’’Now that it has confirmed being aware of this tax evasion, we will request that Sars brief Parliament on the enforcement action it intends to take to bring tax dodgers to book.

’’This means that the vast majority of taxi operators and owners are declaring no corporate tax income at all, and are not paying payroll tax for their drivers and employees.

’’It is illegal to under-declare income and to evade paying taxes. This is a crime under the Tax Administration Amendment Act, carrying a possible prison sentence of two years.

’’It is also unfair to law-abiding, diligent members of the tax-paying public. And this undermines tax morality in the whole country. South Africans will start to ask: ’why should I pay, if others get away with not paying?’

’’In the minister's reply, he sets out some proactive actions Sars is taking to address this problem. However, these are focused on education and voluntary compliance, and none of these deals with enforcement.

’’We will not be able to fix the state, or repair government finances if entire profitable industries just boycott paying tax. This sets a dangerous precedent for the future. We call on Sars to brief Parliament as soon as practically possible.’’

Highlighting that Sars is concerned about avoidance across the tax ecosystem in general, Mboweni said Sars has commenced a process of developing a compliance plan for the taxi industry to encourage voluntary compliance and potentially propose the appropriate tax regime specifically for the industry.

“This work will be concluded in the 2021/22 financial year. The working with and through stakeholders as one of the stated strategic objectives is crucial.”

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