Revisiting Tax Recapitalisation - Can Covid-19 help reshape SA's taxi industry?

71point4 > Blog archive > 2020 > April > 17 > Revisiting Tax Recapitalisation – Can Covid-19 help reshape SA’s taxi industry?
71point4 > Blog archive > 2020 > April > 17 > Revisiting Tax Recapitalisation – Can Covid-19 help reshape SA’s taxi industry?

Revisiting Tax Recapitalisation – Can Covid-19 help reshape SA’s taxi industry?

Posted by: Illana Melzer
Category: Covid-19

 

With taxis providing the majority of passenger trips for workers, the lockdown has hit them particularly hard. There has been some limited relief for taxi owners and employees. As soon as the lockdown was announced, SA Taxi Finance, the largest provider of finance to the sector, announced it would provide interim repayment assistance to taxi operators to help them honour their financial commitments for April.

With regard to UIF and the Temporary Employee Relief Scheme (TERS), many employees of the taxi sector will not be able to access relief because of limited compliance by employers in that sector. To quote from the UIF 2018/19 Annual Report:

“Unfortunately, the taxi sector has been slow in complying with the Fund’s requirements and continues to resist attempts by the Fund to register as can be seen in the negligible increase in registrations during the past year.”

The UIF reported that as at end March 2019, 7 432 taxi employers had registered with the UIF, covering only 7 211 employees, a somewhat curious (although not impossible) pair of statistics.

In light of this, SANTACO, South Africa’s biggest taxi association, recently announced the launch of an independent relief fund to support the taxi industry through the Covid-19 crisis. An IOL article on the fund quotes a senior SANTACO official who notes the critical role the taxi sector plays in “ensuring essential service workers are taken to work as well as commuters that keep the economy of the country going.” According to the report, the association has called on “stakeholders in the taxi industry such as food retailers, taxi dealerships, tyres, and parts manufacturers, banks, and other industry players to come together with the taxi industry and contribute to the fund.”

Since the initial announcement there has been little information from SANTACO about the application process to receive relief from the fund; SANTACO’s website makes no mention of the fund (their last media release update was in 2018). Likewise, they have announced no further information on their social media pages.

Despite this, in many ways such a fund offers enormous opportunity. Access to funding seldom comes without strings attached, and the strings attached to such funding could reshape the taxi sector, and public transport in South Africa in fundamental ways.

As a first step, access to funding could require taxi operators to register with the UIF as a non-negotiable precondition.

It could go further. Discussions around digitising fare collection and getting rid of cash payments by commuters – which must have started almost 20 years ago – have to date yielded nothing. Again, a precondition for access to funding could include not only requirements in this regard, but actual implementation. Taxis that are funded must be brought into a fitment centre so that ‘tap and pay’ devices can be fitted into vehicles. Not only would this support the fiscus in the future. Less cash moving from hand to hand protects everyone – a benefit that must be top of mind right now.

Perhaps most interesting of all is the opportunity offered by telematics. Taxi financiers already require tracking devices to be fitted to vehicles to mitigate the risk of theft and to locate vehicles that need to be repossessed. SA Taxi Finance is reported to have already introduced telematics to monitor and improve the driver behaviour of the 30 000 taxis it finances[1] and one of the requirements to qualify for their payment relief is to have a functioning telematics device in the vehicle[2]. However, more can be done to implement telematics across the industry, estimated to consist of approximately 250 000 minibus taxis[3]. As Discovery has highlighted to the chagrin of bad drivers who have had such devices installed in their own vehicles, telematics can be used to identify reckless driving patterns.

Beyond this, more advanced technology can also allow some degree of remote control. By way of example, the Rwandan Utilities Regulatory Authority (RURA) requires public transport vehicles to be fitted with a ‘speed governor’[4], a device that prevents vehicles from travelling at speeds in excess of 60 kms per hour. It can reduce vehicle speeds to 25 kms per hour if maximum speeds are exceeded. An onboard computer also enables law enforcement officers to review previous speeds and indicates if the device has been tampered with – a criminal offence.

Given the critical role the taxi sector plays in transporting essential service workers and enabling the functioning of the economy as a whole, the sector would no doubt agree that such interventions are a priority.

Author: Illana Melzer

References
[1] Mungadze, S. 2019. Telematics to monitor minibus taxi driver behaviour. https://www.itweb.co.za/content/6GxRKqY81JNMb3Wj (Accessed 17 April 2020)
[2] SA Taxi. 2020. https://sataxi.co.za/sa-taxi-gives-clients-payment-relief-to-weather-lockdown (Accessed 17 April 2020)
[3] Wassermna, H. 2019. The SA minibus taxi industry is absolutely massive – here’s everything you need to know. https://www.businessinsider.co.za/how-big-is-south-african-taxi-industry-2019-5 (Accessed 17 April 2020)
[4] The New Time. 2016. Speed governors now mandatory for public transport vehicles. https://www.newtimes.co.rw/section/read/203904 (Accessed 17 April 2020)
Author: Illana Melzer

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