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E-hailing industry demands budget consideration

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The e-hailing industry is calling on finance minister Enoch Godongwana to recognise drivers as micro-entrepreneurs, and as such, allocate a portion of the SMME budget and tax incentives to the sector.

Godongwana will tomorrow table the 2022/2023 National Budget at the Good Hope Chamber, a precinct of Parliament.

The ride-hailing industry is urging National Treasury, as the department responsible for coordinating the process of allocating funds to various government objectives and programmes, to recognise drivers and couriers as exempt micro enterprises.

It says this would create a far more conducive and sustainable business model for them to formally operate as micro-entrepreneurs, and better embrace the opportunities presented by the fourth industrial revolution.

South Africa’s broad-based black economic empowerment framework is intended to stimulate the process of participation of previously disadvantaged groups in the economy to lead to increased economic growth.

The industry says it is concerned the framework excludes so many SMMEs that don’t have the time or know-how to procure the correct certifications – many of them consisting of e-hailing drivers, operators and couriers.

Andrew Ihsaan Gasnolar, Bolt Southern Africa head of public policy, says ride-hailing services in SA alone support the livelihoods of more than 100 000 people locally – between those directly using e-hailing platforms and those benefiting from being in the broader ecosystem.

As such, the sector should not be side-lined from benefits afforded to other industries.

“As part of red tape reduction by the Presidency, there is an opportunity to ensure Bolt drivers and couriers are recognised as exempt micro enterprises and that client companies receive accreditation for using that service when they use a platform like Bolt to access the market,” explains Gasnolar.

“Furthermore, the Department of Trade, Industry and Competition’s Automotive Investment Scheme offers a non-taxable cash grant of up to 25% for investments in qualifying productive assets; however, this initiative is not granted to aspiring fleet owners in the e-hailing industry.”

If this type of initiative were to be granted to aspiring fleet owners who intend to create opportunities for drivers to earn an income via e-hailing (by buying vehicles to register on e-hailing platforms), the sector would be boosted, and as many of hundreds of thousands of people would have the opportunity to either earn a primary income or add a secondary part-time income, adds Gasnolar.

According to the Gig Workers, Platforms and Government During COVID-19 report compiled by The Fairwork Project, the non-standard employment status of gig workers, such as e-hailing drivers, operators and couriers, makes them particularly vulnerable during SA’s current economic downturn.

As independent contractors, gig workers fall through the cracks and have been unable to access the support offered to formal employees and entrepreneurs, nor the support offered by government to those registered as small businesses, notes the report.

Andrew Ihsaan Gasnolar, Bolt Southern Africa head of public policy.
Andrew Ihsaan Gasnolar, Bolt Southern Africa head of public policy.

Melithemba Mnguni, secretary general of the E-hailing Operators Interim Committee, which represents national drivers and operators, told ITWeb that e-hailing drivers and operators have been side-lined from government’s benefit schemes and tax incentives, missing out on programmes such as training and development initiatives offered through Sector Education and Training Authorities (SETAs).

In SA, independent contractors are subject to a tax rate ranging from 18% to 45%, depending on the income they earn.

“We would like to be included in the budget, particularly having the minister allocate funds to us as part of the various start-up programmes offered. E-hailing driver partners and operators are self-employed and have been hit hard by the COVID-19 lockdowns.

“We are paying high taxes and don’t benefit from tax incentives, nor any BEE initiatives or skills development programme.”

According to Gasnolar, currently, only workers employed by a business large enough to pay the skills levy to its appropriate SETA can access the skills development opportunities made possible by government.

“We would like to see the minister offer this kind of state-funded investment programme to the e-hailing sector, whether it’s for passenger vehicles or courier bikes for the food delivery sector. Reform that enables micro and small enterprises to access these opportunities will provide an adrenaline shot to an ecosystem that can create thousands of viable and sustainable micro-enterprises across the country.”

The e-hailing sector held various protests over the last two years, calling on government to urgently regulate the industry, and assist in resolving the many challenges faced by workers and operators.

“Among many issues, regulation ensures e-hailing companies are recognised as transport companies instead of software organisations. This would ensure companies are subject to relevant transport regulations, and will pay fair wages and provide better working conditions for all drivers and operators. This would eliminate exploitation and ensure the industry benefits in tax relief schemes and other programmes,” adds Mnguni.

Uber was not able to comment on the matter.

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