1887

OECD Economics Department Working Papers

Working papers from the Economics Department of the OECD that cover the full range of the Department’s work including the economic situation, policy analysis and projections; fiscal policy, public expenditure and taxation; and structural issues including ageing, growth and productivity, migration, environment, human capital, housing, trade and investment, labour markets, regulatory reform, competition, health, and other issues.

The views expressed in these papers are those of the author(s) and do not necessarily reflect those of the OECD or of the governments of its member countries.

English, French

How can South Africa's tax system meet revenue raising challenges?

Reforms over the past two decades have produced a well-balanced, modern tax system. However, considerable revenues will be needed in the years ahead to expand social spending and infrastructure in order to raise growth and well-being. The challenge is to generate these revenues without penalising growth or exacerbating inequality. Income taxes represent around half of total tax revenue but are levied on small tax bases, partly reflecting the distribution of income. A revenue source less detrimental to growth is consumption taxes, which are mostly raised by the relatively broad value-added tax. Nonetheless, there is some scope to raise further revenue, particularly through broadening the base of these taxes further. Revenues from property taxation are currently limited by the inefficient municipal rates system, which does not function well. An important additional source of revenue is environmentally related taxes. In the design of the tax system, consideration should also be given to the appropriate taxation of the natural resources sector, which remains an important issue for a resource-rich country like South Africa.

English

Keywords: consumption tax, business taxes, natural resource taxation, property tax, South Africa, income tax, green taxation, tax systems
JEL: H25: Public Economics / Taxation, Subsidies, and Revenue / Business Taxes and Subsidies including sales and value-added (VAT); H20: Public Economics / Taxation, Subsidies, and Revenue / Taxation, Subsidies, and Revenue: General; H23: Public Economics / Taxation, Subsidies, and Revenue / Taxation and Subsidies: Externalities; Redistributive Effects; Environmental Taxes and Subsidies; H27: Public Economics / Taxation, Subsidies, and Revenue / Taxation, Subsidies, and Revenues: Other Sources of Revenue; H24: Public Economics / Taxation, Subsidies, and Revenue / Personal Income and Other Nonbusiness Taxes and Subsidies; includes inheritance and gift taxes
This is a required field
Please enter a valid email address
Approval was a Success
Invalid data
An Error Occurred
Approval was partially successful, following selected items could not be processed due to error