Big tax problem with Sixty60 and Uber Eats

On-demand delivery services in South Africa not only disregard the safety of their motorcycle riders but could also be placing a bigger burden on taxpayers.

That is the view of Driving.co.za managing director Rob Handfield-Jones, who regards the use of contracted motorcycle riders as a “textbook case of big business capitalising profits and socialising risk.”

“The use of third-party providers enables the services to wash their hands of what would otherwise be a huge expense,” Handfield-Jones said.

“If the riders were actually employed, they would have to be paid at least minimum wage, and the scooter, as a tool-of-trade vehicle, would have to be owned, fuelled, and maintained by the actual business.”

Handfield-Jones accused on-demand companies that use contracted workers of “lacking even the slightest respect” for the riders who worked under “horrendous” conditions for “negligible” pay.

“By outsourcing deliveries, a race to the bottom has happened much like we saw happen in the truck driving industry a couple of decades ago,” he said.

“Drivers could not refuse to drive unroadworthy or overloaded vehicles, because they knew they could be replaced in the blink of an eye. “

“The trucking industry is still overrun by dangerously under-maintained trucks, overloaded, driven by incompetents.”

Motorcycle Safety Institute founder Hein Jonker has also called on on-demand delivery companies to at least subsidise or pay for rider training and provide appropriate safety equipment.

He also wants the companies to regularly inspect riding kits and motorcycles, subsidise medical or life insurance policies for riders, and offer monthly safety talks.

Handfield-Jones said that the current hands-off approach taken by on-demand delivery services resulted in many rider fatalities.

“Call round to a few trauma units and ask them how many dead riders they get per week,” he said. “Now multiply that by the number of trauma units countrywide and the scale of the disaster will become clear.”

“That is part of the socialised cost of the race to the bottom in the delivery industry.”

Shifting costs to the taxpayer

Handfield-Jones said it was not just families, hospitals and insurers who suffered.

“The taxpayer picks up the tab for emergency medical services and police response, traffic delays caused by the crash, transport of the dead or injured, post-mortem and pathology costs, and any public infrastructure damage,” he said.

“The delivery companies can replace a dead rider instantly, and the cost of the crash to them is negligible; nothing more than a re-delivery and perhaps product replacement. All other costs are outsourced to society at large.”

Handfield-Jones argued that on-demand services did not have the excuse that full employment and vehicle ownership would make their business models unviable.

“Some businesses — like pathology laboratories — have in-house fleets whose riders receive ongoing training, motorcycles are well maintained, and disciplinary proceedings are applied to miscreants who don’t obey traffic laws.”

“It can be done, and it can be done cost-effectively.”

Handfield-Jones believes that the South African Revenue Service’s (Sars’s) definitions would strictly disqualify on-demand delivery drivers from being considered contract workers.

“Most of these riders would be classed as employees of the actual online stores and services, meaning they should be on their payroll and registered for tax,” he said.

“It’s strange that Sars has this big stick which could provide protection to the abused gig economy workers at a single stroke, yet doesn’t use it.”

“Perhaps, since they’re all minimum wage or a little better, Sars sees no tax benefit in doing so and couldn’t be bothered.”

When speed does kill

Aside from the potential legal issues, Handfield-Jones pointed out that consumers had become sensitised to rapid delivery, which increased the likelihood of accidents.

“It’s time they were de-sensitised. Online deliveries should proceed only at the fastest speed commensurate with road safety,” he said.

“Companies should stop using delivery times as a selling point, and cease deliveries altogether during rainy weather.”

“If someone needs a burger that badly, let them get in their own vehicle and take the risk themselves.”

Handfield-Jones explained there were decades-old examples of speed-focused deliveries resulting in more road accidents.

He pointed out that US chain Domino’s faced hundreds of lawsuits due to a 30-minute delivery guarantee with compensation for customers if their pizza arrived late.

In the most high-profile case, the company was found liable for more than $78 million in damages — both actual and punitive — after a driver struck a woman in St.Louis.

After the case, the company abandoned the 30-minute delivery policy.

Handfield-Jones said another example was the adoption of motorcycles used by pharmacies to deliver medicine in the 1980s in South Africa.

“We derisively called them Kamikaze Pilots because of the way they rode — and died,” he said.

“35 years later, here we are again, with the country seemingly having learned nothing about the pitfalls of offering cheap, rapid delivery.”