South Africa has a very limited public transport system and this goes back to the Apartheid era. Races were allocated certain regions and generally the blacks were placed on the outskirts so they developed their own informal private transport systems. Before 1994 every taxi had to have a valid permit and after 1994 the new government removed taxi inspectors entirely which then became a free for all. Today the informal minibus taxis are serving around 70% of households with their transport needs and are the backbone of the commuter system. Roughly 15 million workers use the 250 000 minibus taxis to travel to and from work each day.
The announcement this week that the informal taxis are going to introduce a taxi card that will replace cash payments. The taxi card will need to be loaded with funds and then scanned when entering the taxi. This does not sound like a big deal, but it is as the informal sector runs entirely on cash.
The informal sector is like having another economy on it's own which has people guessing throwing numbers around estimating the informal sectors turnover somewhere between R1 and R3 Trillion. This sector also employs an estimated 6 million people which accounts for 22% of unregistered employment. The bigger picture is this hidden economy also pays no taxes or vat on any transactions and why the government is introducing schemes like the taxi card.
Just to give you an idea the 250 000 taxis servicing the roughly 15 million passengers daily during the peak rush hours generates in excess of R100 billion per year. Last year the taxman received less than R5 million so there is many billions that are not being declared for the taxi fares and also the salaries for the drivers.
The government is saying the change in payment from cash to card is for the passenger safety and not because they can smell more tax revenue. The tax industry is like a mafia organization who make up the rules as they go along. Many taxis are not roadworthy and drivers have been caught with no driving licenses so safety is definitely an issue here, but not the carrying of money and more about the vehicle itself.
In the last few years they have burned the public transport busses, forced people out of cars if they are taking work colleagues or even family members to work. UBER and BOLT the online hailing taxis have been forced out of some areas with cars being destroyed. No one can threaten their business and was also a reason why trains were vandalized forcing commuters to use the taxis. The government and law enforcement are scared of the taxi industry because they are that powerful.
Knowing this why would the informal taxis now accept card payments unless those in charge of the taxi association are being promised some financial benefits more than they are currently earning for running this new system. A card payment system would require money ending up in a bank account with a record of the revenue generated through fares.
You wonder at what point this will all fall apart when the taxi owners see less profit due to paying taxes for the very first time. Drivers paying taxes on their salaries will not be seen as welcome and there will no doubt be only a small percentage of passengers paying by card. This is not going to end well and you do not have to be smart to see this being rejected.
The taxis operate a basic system with drivers paying the owner between R800 and R1200 daily with the remainder going to the driver as his salary. This is why they drive like they do and are a law unto themselves. a taxi owner can earn R30 R40 000 monthly per taxi with the driver earning between R6 and R10 000 depending on the routes. These routes are controlled by the taxi industry so each taxi pays a license fee to operate on that particular route. Wars have broken out with drivers picking up passengers when not registered on that route and shootings were an everyday occurrence.
Those taxis forced onto this new payment scheme may not quite understand all the implications until they find out the real reason why the changes took place. Even at a 20% tax rate there are 20 billion reasons why the government desperately wants this to work and why it will not work.