'No exemption for taxi owners'
There is no exemption from value-added tax (VAT) on the purchase of the new taxi vehicles, Transport Minister Jeff Radebe said.
However, he said that capital gains or income tax would not apply to the scrapping allowance that would be provided to taxi operators.
In reply to a parliamentary question from DA transport spokesman Stuart Farrow, the minister said operators would be expected to pay the applicable VAT "as part of the normal sales process".
"The government has already created an opportunity for taxi operators to regularise their outstanding tax affairs . with the South African Revenue Service [through the small business tax amnesty open until May].
"It should, however, be noted that the Department of Transport had discussions with the National Treasury about the non-taxation of the R50000 scrapping allowance payable to taxi operators who successfully apply for the scrapping of their old taxi vehicles through the taxi recapitalisation project," said Radebe.
"During the discussions a commitment has been secured whereby the scrapping allowance will not be subject to taxation, as such a move would summarily reduce the actual monetary value of the allowance," he said.
Radebe noted that Finance Minister Trevor Manuel had pledged that the full benefit of the allowances would be ensured and that the scrapping payments would "not trigger any income or capital gains tax".
Taxi owners have said the R50000 given for scrapping taxis is not enough and that the amount should be at least doubled if taxi operators are to keep up with payments for the new vehicles. - With I-Net Bridge