Tax(i)ing the poor? Commuting costs in South Africa

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University of Cape Town


In this paper I describe the monetary and time costs of commuting to work in South Africa. I find that these costs are high and that monetary costs of commuting have increased faster than inflation, mainly through a shift away from walking and towards minibus taxis and driving. Journey times are substantially higher than the OECD country average. Using a method suggested by Hausmann (2013) I estimate the effective tax on hourly earnings that the time and monetary costs of commuting impose. I find high effective tax rates, which are a disincentive to working far from home. This only deepens the puzzle of why South Africa's informal sector is so small, since more than half of the informally self-employed work at home and pay no transport costs. I show that whilst minibus taxis conveyed around 71% of commuters that used public transport in 2013, the industry receives less than 1% of the direct public transport subsidy provided by the South African government. I find that the subsidy accrues mainly to bus and train users in the lower middle part of the labour income distribution.

Andrew Kerr, Senior Research Officer, DataFirst, University of Cape Town

I acknowledge funding from an incentive grant from REDI3x3. The paper has benefitted from the comments of participants at SALDRU and CSSR (University of Cape Town) and RESEP (Stellenbosch University) seminars. This paper was also published as REDI3x3 Working paper 12.

In the interests of transparency: I am the co-owner of a website that assists commuters to use minibus taxis in Cape Town and Durban, see: