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The relationship between tax and economic growth: A South African perspective
The purpose of this study is to investigate the impact of taxes in general and across the major three tax types, PIT, CIT and VAT on economic growth in South Africa. South Africa faces critically low growth levels amidst other challenges of high unemployment levels and significant inequalities. Gove...
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| Format: | Thesis |
| Language: | English |
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Research of GSB
2017
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| _version_ | 1867613250289401856 |
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| access_status_str | Open Access |
| author | Riba, Lerato |
| author2 | Alhassan, Abdul Latif |
| author_browse | Alhassan, Abdul Latif Riba, Lerato |
| author_facet | Alhassan, Abdul Latif Riba, Lerato |
| author_sort | Riba, Lerato |
| collection | Thesis |
| description | The purpose of this study is to investigate the impact of taxes in general and across the major three tax types, PIT, CIT and VAT on economic growth in South Africa. South Africa faces critically low growth levels amidst other challenges of high unemployment levels and significant inequalities. Government has a role of intervening in the economy through provision of public goods and services promoting economic development. This is facilitated through the levying of taxes. With the current concerns around tax policy and imminent tax increases in South Africa, it is imperative that a causal relationship between taxes and growth be investigated. The study covers the period 2003 to 2016, employing the ARDL framework to establish a long run relationship between taxes and growth at aggregate tax level, as well as major tax type level, where the model specified is derived from the GDP aggregate income approach. Results obtained indicate a long run equilibrium only at tax type level. This is followed by the Granger causality test that supports a demand-following hypothesis of growth over taxes in aggregate and PIT and CIT in particular, as well as a bi-directional relationship between growth and VAT, considered and indirect tax, consistent with the supply-leading hypothesis of consumption over growth. The results thus suggest that a positive relationship exists between taxes and growth where increases in tax lead to increases in growth in the VAT instance, then in the instance of increases in PIT and CIT, a result of increases in growth. It is recommended the Davis Tax Commission consider an increase in VAT rather than in the other tax types so as to bring about a more impactful, positive increase in economic growth, in alignment to the NDP. |
| format | Thesis |
| id | oai:open.uct.ac.za:11427/25393 |
| institution | University of Cape Town (South Africa) |
| language | eng |
| last_indexed | 2026-06-10T12:33:08.525Z |
| license_str | Not specified — see source repository |
| provenance_str_mv | Harvested via OAI-PMH from UCTD — University of Cape Town Open Access Repository |
| publishDate | 2017 |
| publishDateRange | 2017 |
| publishDateSort | 2017 |
| publisher | Research of GSB |
| publisherStr | Research of GSB |
| record_format | dspace |
| source_str | UCTD — University of Cape Town Open Access Repository |
| spelling | oai:open.uct.ac.za:11427/25393 The relationship between tax and economic growth: A South African perspective Riba, Lerato Alhassan, Abdul Latif Development Finance The purpose of this study is to investigate the impact of taxes in general and across the major three tax types, PIT, CIT and VAT on economic growth in South Africa. South Africa faces critically low growth levels amidst other challenges of high unemployment levels and significant inequalities. Government has a role of intervening in the economy through provision of public goods and services promoting economic development. This is facilitated through the levying of taxes. With the current concerns around tax policy and imminent tax increases in South Africa, it is imperative that a causal relationship between taxes and growth be investigated. The study covers the period 2003 to 2016, employing the ARDL framework to establish a long run relationship between taxes and growth at aggregate tax level, as well as major tax type level, where the model specified is derived from the GDP aggregate income approach. Results obtained indicate a long run equilibrium only at tax type level. This is followed by the Granger causality test that supports a demand-following hypothesis of growth over taxes in aggregate and PIT and CIT in particular, as well as a bi-directional relationship between growth and VAT, considered and indirect tax, consistent with the supply-leading hypothesis of consumption over growth. The results thus suggest that a positive relationship exists between taxes and growth where increases in tax lead to increases in growth in the VAT instance, then in the instance of increases in PIT and CIT, a result of increases in growth. It is recommended the Davis Tax Commission consider an increase in VAT rather than in the other tax types so as to bring about a more impactful, positive increase in economic growth, in alignment to the NDP. 2017-09-26T14:51:56Z 2017-09-26T14:51:56Z 2017 Master Thesis Masters MCom http://hdl.handle.net/11427/25393 eng application/pdf Research of GSB Faculty of Commerce University of Cape Town |
| spellingShingle | Development Finance Riba, Lerato The relationship between tax and economic growth: A South African perspective |
| thesis_degree_str | Master's |
| title | The relationship between tax and economic growth: A South African perspective |
| title_full | The relationship between tax and economic growth: A South African perspective |
| title_fullStr | The relationship between tax and economic growth: A South African perspective |
| title_full_unstemmed | The relationship between tax and economic growth: A South African perspective |
| title_short | The relationship between tax and economic growth: A South African perspective |
| title_sort | relationship between tax and economic growth a south african perspective |
| topic | Development Finance |
| url | http://hdl.handle.net/11427/25393 |
| work_keys_str_mv | AT ribalerato therelationshipbetweentaxandeconomicgrowthasouthafricanperspective AT ribalerato relationshipbetweentaxandeconomicgrowthasouthafricanperspective |