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Trends in tax revenue collection in South Africa (1994-2010)
In taking over the reins of fiscal administration, the 1994 Government embarked upon a strong adjustment programme in the fiscal landscape, which resulted in a hike in the tax burden in the earlier part of this period (1994-1999) but eventually provided some fiscal space for the government to embark on strong expenditure growth and continued tax relief in the face of adverse global conditions in the later part of the period (2000-2010). The contribution of the different tax sources to total revenue collected between 1994 and 2010 is shown in Figure 1.3, whilst Table 1.5 shows movements in the tax structure and Table 1.6 assesses tax compliance over this period. Tax share data for the different revenue sources for South Africa can be found in the South African Reserve Bank (SARB) database. Figure 1.3 indicates that from 1994 to 2010, individuals continued to shoulder an increasingly dominant share of the direct tax burden in comparison with companies.
In the earlier part of this period, whilst individual taxes on average contributed 40.8% to total revenue between 1994 and 1998, company taxes‟ contribution was only 14.4% in the same period. Similarly, between 1999 and 2003 individuals on average contributed 39.4% whilst company taxes‟ contribution slightly increased to 19.5% from 14.4 in the previous period. During the period 2004 to 2010, however, the gap between the average tax burden on individuals and companies seems to have narrowed. Whilst the contribution of individual taxes to total revenue declined to 31.1% between 2004 and 2008, company taxes‟ contribution increased to an average of 26.3% during the same period. Between 2009 and 2010 both PIT and company taxes‟ contributions to total revenue increased to 33.9% and 28.6% respectively.
Review of South Africa’s public debt and fiscal balance pre-1994
The public debt of South Africa is defined as the sum of the domestic debt (i.e. marketable and non-marketable) and foreign debt owed by the national government. Figure 1.8 indicates that between 1960 and 1993, South Africa‟s ratio of public debt to GDP remained below 50%. In 1960 the ratio was 48.2% but it declined to an average of 31.3% between 1980 and 1984 before increasing immediately prior to the first democratic election to 43.5% in 1993. In a similar vein, the political tension, combined with domestic and international recession meant that the government could not introduce expenditure cuts within these periods (Burger, et al. 2012:209 27). This was reflected in the large fiscal deficit during these periods (Figure 1.9),averaging about 3.6% of GDP between 1990 and 1993, with the largest deficits recorded in 1993 (7.3%).
CHAPTER ONE: INTRODUCTION AND BACKGROUND
1.1 Introduction
1.2 Defining fiscal sustainability
1.3 A review of South Africa‟s fiscal policy changes
1.4 Summary
1.5 Research Statement
1.6 Outline of the dissertation
CHAPTER TWO: LITERATURE REVIEW
2.1 Introduction
2.2 Theoretical literature review of the fiscal sustainability concept
2.3 Literature on fiscal policy changes, the shadow economy and fiscal sustainability
2.4 Literature on fiscal policy changes, economic growth and fiscal sustainability
2.5 Summary and conclusion
CHAPTER THREE: FISCAL REACTION AND THE SUSTAINABILITY OF FISCAL IMBALANCE IN SOUTH AFRICA
3.1 Introduction
3.2 Background
3.3 Specification and estimation techniques
3.4 Data discussion
3.5 Empirical results
3.6 Summary and Conclusion
CHAPTER FOUR: TAX STRUCTURES TO PROTECT THE REVENUE BASE FROM SHADOW LEAKAGES
4.1 Introduction
4.2 Background
4.3 Modelling and estimating the Shadow Economy
4.4 Summary and Conclusion
CHAPTER FIVE: AN EMPIRICAL INVESTIGATION INTO THE MACROECONOMIC EFFECTS OF FISCAL POLICY STRUCTURE IN SOUTH AFRICA
5.1 Introduction
5.2 Background
5.3 Methodology
5.4 Results
