Govt’s R1.1 billion gift to taxis was going to force them to formalise. Now, not so much.

The operators of minibus taxis, e-hailing drivers, and cab operators can now apply for payments of R5,000 each, under an “ex gratia” taxi relief fund worth R1.135 billion, linked to Covid-19 restrictions on their operations.

That spells the final death of a plan to use that long-allocated amount to force formalisation on the industry, making operators set up businesses that must comply with labour laws – mostly.

One aspect of that plan has quietly remained in place, not in the rules but in the implementation of the scheme: a requirement for recipients to have company registration and business banking paperwork, if they want to see the cash.

Transport minister Fikile Mbalula announced the opening of the scheme for applications this week, 17 months after Parliament agreed to the allocation – when the department of transport had to cut R4.6 billion from roads and rail to make the special Covid-19 budget needs.

In the time since, taxi operators blockaded major roads in protest at the quantum of the relief funding, demanding four times the allocated amount, and threatened a national strike, with support from the likes of the EFF.

The amount of money available has remained the same, but taxi operators scored what seemed like a significant victory when Mbalula rolled back formalisation plans linked to the payments.

In March last year, Mbalula decreed that recipients would have to commit to a timeline for establishing formal businesses around their taxi operations.

The “relief scheme provides an opportunity for the formalisation of the taxi industry”, said rules around payment, with the promise that such formalisation would allow for future subsidies, of the kind for which taxi associations have tirelessly campaigned.

Taxi businesses would have to make payments to the Unemployment Insurance Fund (UIF) and make their Skills Development Levy (SDL) payments, and comply with labour laws.

Taxi operators “will be required to transfer their operating licences to business entities within seven years”, the rules held, and minibus taxis still being financed had to be transferred from private owners to companies within five years.

In December, new rules wiped out all those requirements, no longer making any reference to formalisation. Instead, taxi operators were only required to show they were either citizens or permanent residents, that they had valid operating permits, and that they were registered for income tax.

Those were also the only requirements Mbalula highlighted this week.

The implementation of applications, however, suggests those without the formal trappings of a company may have a hard time getting paid their R5,000 – regardless of the changed rules.

Documents required to register for the taxi relief scheme include a company registration certificate, and bank confirmation of a business bank account, with no payments to be made into the accounts of third parties.


Business Insider


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