Abstract
A tax-efficient structure is crucial for generating higher revenues while ensuring fairness for all
citizens of a country, with the ultimate goal of benefiting humanity. The qualities and
characteristics of an effective tax collection system are determined by the canons of taxation,
which involve trade-offs, with fairness being a key consideration among the canons. The
informal sector persists in conducting business without registering with revenue authorities to
avoid paying taxes, and as this sector is estimated to contribute 15 to 30% to the country’s
business activity, this results in significant revenue losses for the country. The taxi industry,
especially the minibus taxi sector, plays a large role in South Africa’s transportation system,
with substantial socioeconomic impacts, holding a significant market share and transporting
approximately 65 to 70% of commuters, particularly those living in urban areas. This study
compared international tax systems to design a simplified tax regime for including the taxi
industry in South Africa’s tax base. Barriers to inclusion were examined in relation to source
documentation and data by integrating the Fourth Industrial Revolution and third-party data
collection. Efforts to include the informal sector, such as the taxi industry, aimed to improve
tax fairness by expanding the tax base. Addressing tax evasion requires understanding the
influence of peers, trust in government and perceptions of fairness. A qualitative research
method was used to conduct a comparative literature review. Upon comparing the results, it
was evident that every country in the sample has attempted to integrate the informal sector
into the tax system. Although the introduction of a basic tax was not universally well received,
some countries found advantages in making trade-offs and incorporating these into social
security funds. While presumptive taxes are simpler to administer, they often compromise
fairness, necessitating reforms to balance efficiency with equity and align with sound taxation
principles. It was concluded that the most effective approach to bringing the informal sector
into the tax base is through a straightforward direct tax. Furthermore, this inclusion will
enhance fairness and contribute to the common good. The lack of research on taxing the taxi
industry in South Africa emphasises the importance of this study.
Keywords
presumptive taxes; informal sector; taxi industry; fairness; 4IR; third-party data