Over half of drivers of taxi-hailing vehicles would earn below minimum wage if they were to pay turnover taxes and meet other statutory obligations, a new study shows.
Research firm Viffa Consult found that 66 per cent of the taxi drivers received a gross income of over Sh20,000 a week, but most of them got 30 per cent in net income from this before taking account of fuel, car washing and other incidental expenses.
The minimum wage currently stands at a gross of Sh13,572 per month.
The data showed that 33 per cent of the drivers made a gross turnover of between Sh20,000 and Sh30,000 a week while another 33 per cent made over Sh30,000. However, 52 per cent of both groups got a net of 30 per cent of the turnover.
“Despite 66 per cent of drivers grossing over Sh20,000 a week, 52 per cent netted less than 30 per cent of the turnover not considering fuel , car washing and other incidental cost that are borne by the driver which further reduces their net pay,” the study found.
“If taxation and other statutories were to be factored in, these drivers would be below minimum wage.”
It was however unclear as to whether the other 48 per cent whose net income was above 30 per cent of turnover made net amounts that were significantly above the minimum wage.
In a report submitted to Parliament just two weeks ago, the Kenya Revenue Authority demanded taxes from the taxi hailing firms and also accused their drivers of not paying taxes on their earnings.
The Viffa Consult research also showed that most of those who enter the taxi business do it to earn additional income or because of inability to secure formal employment. Other reasons for going into the trade are flexibility in working hours and being a better paying jobs than what they previously held.
Most the respondents – 65 per cent – in the survey indicated that they owned the cars they drive while 23 per cent had leased from a third party and 12 per cent were co-owned with the taxi company. Some 10 per cent of the locally owned taxi hailing companies offered equity options to loyal drivers using their apps.