South Africans May Have to Help Fund Taxi Upgrades As Government Explores New Plan

• Transport Minister Barbara Creecy confirmed the Department of Transport is looking at redirecting an existing state grant toward electric vehicle adoption in the taxi industry
• The Taxi Recapitalisation Programme has already scrapped over 72,000 old vehicles and paid out more than R4.4 billion since its 2006 launch
• Critics raised concerns about using public tax funds to subsidise an industry that generates an estimated R90 billion annually but contributes only around R5 million in income taxes

South Africa's Department of Transport is weighing a plan to repurpose an existing government grant to help minibus taxi operators shift from petrol and diesel vehicles to electric alternatives. Transport Minister Barbara Creecy confirmed the exploration during an interview with broadcaster Newzroom Afrika, signalling that the proposal is under active internal consideration but has not yet been formalised into an approved programme.

The minibus taxi sector is the primary mode of daily transport for millions of South Africans, particularly lower-income commuters travelling across urban centres and rural areas. As fuel costs continue to climb, operators face tightening margins and often pass the burden onto passengers through fare increases, deepening the cost-of-living pressure on households that can least afford it.

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What the proposal involves

The plan centres on restructuring the Taxi Recapitalisation Programme, a capital subsidy funded through the National Revenue Fund. Originally launched in 2006 with a budget of R7.7 billion, the programme was designed to take unsafe, ageing minibus taxis off the road in exchange for compliance allowances operators could use to purchase newer vehicles. Since its inception, the programme has retired more than 72,000 old vehicles and disbursed over R4.4 billion in state allowances.

Minister Creecy argued that without government intervention, the transition to electric mobility would benefit only wealthier motorists, leaving public transport operators and their passengers dependent on increasingly expensive fossil fuel technology. Electric vehicles offer considerably lower daily running and maintenance costs, which could shield commuters from fare hikes driven by volatile global oil prices.

Key obstacles the plan faces

According to a report, the proposal has drawn scrutiny on several fronts. A significant concern involves the tax contribution of the minibus taxi industry itself. Finance Minister Enoch Godongwana previously flagged the sector as a target for expanded tax compliance, noting that while it generates an estimated R90 billion to R100 billion annually, it contributes only around R5 million in income taxes. Critics argue it is difficult to justify directing public tax revenue toward subsidising an industry with such low fiscal compliance.

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Minister Creecy also raised a separate but related complication: a potential decline in Road Accident Fund revenue, which relies heavily on fuel levies. She proposed a transitional vehicle licence disc renewal fee to offset this projected shortfall as fuel consumption decreases over time.

For now, the electric taxi transition remains a policy idea under review. No funding framework has been approved, and the government has not committed to a timeline for implementation.

More on South Africa's taxi industry

• Briefly News recently reported that the NPA froze R99 million in assets belonging to Mpumalanga taxi boss Joe Sibanyoni, including luxury cars and properties, as his extortion case continues.
• Cape Town International Airport faced major disruptions after taxi violence left it critically short-staffed, with travellers advised to allow an extra four hours for processing.
• A South African motorist captured a terrifying highway shooting amid taxi violence, with the emotional footage showing people fleeing as chaos unfolded.

Source: Briefly News