The small business tax amnesty runs out at the end of this month but, so far, fewer than 5Â 000 of South Africa’s estimated 114Â 000 minibus-taxi operators have applied for it, setting the scene for what could be a major clash between the South African Revenue Service (Sars) and the country’s most difficult industry.
When the amnesty was originally conceived last year, the idea was to target the taxi industry first before offering it to other industries. The reason was the urgent need to ensure that the R50Â 000 scrapping allowance — taxpayers’ money that government was about to hand out to thousands of taxi owners as part of the taxi recapitalisation programme — would at least be given to tax-clear citizens.
Apart from creating order in the chaotic industry, formalisation also needs to take place before government can start subsidising taxi fares, as it does for train and bus commuters.
But, as the starting date for the amnesty drew near, the plan changed, and from August 1 last year the amnesty was offered to all businesses with a turnover of below R10-million a year, including taxi owners.
Tax experts all describe the amnesty as extraordinarily generous. Provided a business fully declares its income for one year only, and pays tax on it plus a small penalty, all other taxes are waived, no matter how much or how outrageous.
The tax amnesty comes on top of another formalisation process in the taxi industry. Taxi operators used to hold “radius” permits, allowing them to operate on any route within a certain radius. This led to numerous clashes when taxis crowded the most lucrative routes in an area.
The department of transport then introduced new-order operating licences, which specify fixed routes. Registering as a taxpayer is a prerequisite for obtaining a new licence. So far, 119Â 843 applications for the new licences have been received, says the department of transport’s Colin Msibi. Of these, 87Â 000 have been approved.
Therefore, 87Â 000 taxi operators have recently registered for tax, but only 4Â 305 have so far applied for the amnesty. The holders of the new licences are prime candidates for the tax amnesty, because most would have been trading informally for several years — there is a moratorium on new entrants during the licence-conversion process.
Alfred Nevhutanda, head of the national licencing board, argues that many taxi operators also run other businesses such as shops and as such are long-standing taxpayers.
But this does not fit well with the notoriously informal nature of the industry, as well as the original need for introducing the amnesty.
Sars faces the possibility of a stampede, quite literally, of thousands of taxi-owners in the last two weeks of the amnesty.
More ominous, however, is a scenario in which most taxi owners simply continue to ignore the amnesty, some out of ignorance, some out of stubbornness and some because they confuse registering for tax with having a tax-clearance certificate.
At the time of going to press, Sars had received 97Â 687 enquiries about the amnesty. A total of 41Â 163 application forms had been issued, and 35Â 443 received, of which 5Â 448 were from the services sector, 5Â 447 from retail and wholesale, and 2Â 433 from the construction industry.