New Tax Plans for Minibus Taxis and E-Hailing Could Push Up Commuter Fares
- An expert from North-West University warned that taxing minibus taxi and e-hailing operators without first formalising the sector could backfire
- Dr. Olebogeng Ambrocius Baikgaki pointed out that operators already contribute to the tax base through fuel levies, VAT, and vehicle purchases
- The expert cautioned that extra tax burdens risk being passed directly to commuters through higher fare prices
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New government proposals to draw South Africa's minibus taxi and e-hailing operators further into the formal tax net have drawn a sharp warning from an academic economist: without proper groundwork, ordinary commuters could end up paying the price.
Dr. Olebogeng Ambrocius Baikgaki of North-West University argues that formalisation must come before taxation. He believes policymakers need a clear, practical plan to support small operators who already work with tight margins and do not have the administrative capacity to handle complex tax compliance requirements.
A sector that already contributes
Part of what makes the proposals contentious is that taxi operators are not entirely outside the tax system. According to Dr. Baikgaki, the industry already feeds into the national tax base indirectly through fuel levies, VAT on spare parts, insurance premiums, banking fees, and vehicle purchases. These contributions are simply less visible than direct income tax.
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What further complicates the picture is that the minibus taxi industry, unlike bus and rail services, receives virtually no state subsidies. Operators absorb rising costs of fuel, vehicle finance, repairs, and insurance largely on their own.
Passengers and jobs at risk
Dr. Baikgaki's most pressing concern is what happens at street level. If direct tax obligations increase, operators are likely to recover those costs by raising fares, meaning the financial pressure shifts onto the very commuters who depend most on affordable transport.
Beyond fare hikes, there is also the risk that some operators may not survive the added financial strain at all. Business failures in the sector would translate into job losses, affecting drivers, rank workers, and others tied to the industry.
The expert is calling on the government to conduct thorough research before moving forward and to engage directly with transport stakeholders and tax specialists. He also argues that any serious conversation about tax compliance in the taxi sector must be paired with a discussion about what state support structures, including potential subsidies, could look like for operators.
The proposals have yet to be finalised, but the debate they have sparked reflects just how delicate the balance is between growing the tax base and protecting the livelihoods of millions of South Africans who rely on affordable public transport every day.
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Source: Briefly News
