Here’s how much it costs to own and run a taxi in South Africa

 ·12 May 2021

SA Taxi owner, Transaction Capital has published its annual report for 2020, outlining the costs of operating a taxi in South Africa.

The group’s data show that minibus taxis have grown in popularity over the last few years, with an estimated 15 million commuter trips undertaken daily.

This has come about due to increased dissatisfaction around bus stop facilities and rail’s dwindling operating capacity.

Despite the uptick in usage, SA Taxi said it has become increasingly expensive to own a taxi in South Africa. The report shows that retail prices for minibus taxis have risen 3.5% since October 2020, with further increases expected this calendar year.

The group said that the recommended retail price of a Toyota HiAce diesel vehicle is now R493,900, compared to R360,000 six years ago.

With passenger loads per trip down due to the impact of Covid-19, the industry’s profitability will remain under strain, it said.

SA Taxi provided a breakdown of a typical new credit agreement as follows:

Item Amount
Recommended retail price of a Toyota diesel taxi R493 900
Interest charged 20.2% 
Term in months 71
Origination fee R2 990
Finance instalment R12 125
Insurance instalment (comprehensive, credit life and other) R3 143
Administration fee R69
Telematics fee R294
Total monthly instalment R15 631

Factors supporting industry profitability in the period included lower interest rates and fuel prices, SA Taxi said.

“At 31 March 2021, the 12-month average for petrol and diesel prices were, respectively, 9% and 14% lower than a year ago.

“The fuel price hike in April 2021, however, resulted in the highest fuel price in recent years. Due to the profitability impact of lower passenger loads per trip due to pandemic-related restrictions combined with increased vehicle prices.”

While the report does not include data on fares and collections, the group’s previous annual data does provide a rough outline of earnings based on certain trips.

Over shorter-distance routes, like a 23km trip between Soweto and Johannesburg, operator profits are around R25,000 a month, while longer distance trips, like the 595km trip between Joburg and Durban, can lead to profits of around R37,000 per month, the group said.

The minimum monthly profit recorded by the group was R6,000 a month, as per its credit profiles on loans on book.

Other key data on taxi drivers and operators includes:

  • The average number of vehicles that a customer owns is 1.3;
  • The average age of a customer is 48;
  • The average age of a vehicle is 4.5 years;
  • 89% of all the vehicles are made by Toyota.

Tax focus 

One area which could impact taxi profits is an increased collections drive from the South African Revenue Service (SARS).

In a written parliamentary Q&A published this week, finance minister Mboweni said that SARS collected approximately R5 million in Corporate Income Tax (CIT) from taxi operators. However, this amount includes tax collected from their employment income, he said.

“This is because the industry does not correctly disclose income from taxi business on their CIT returns but included under a generic income source code. We were not able to determine income solely from taxi operations.

“Our analysis indicates that the majority of the taxi industry is declaring a nil return or are having a refund due to them.”

Mboweni said that SARS is concerned about tax avoidance across the tax ecosystem in general – with the taxi industry seen as a point of contention. To this end, SARS is adopting a number of targeted interventions.

He added that SARS has a unit dedicated to improving compliance of SMMEs, which includes the taxi industry.

“We had various engagements with the industry bodies in the year 2020/21 to create alignment as well as to educate. Furthermore, SARS has worked in collaboration with the Department of Transport to share data on work on their taxi industry transformation agenda.”

Read: Government’s plan to ‘formalise’ and regulate taxis in South Africa

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