The potential impact of abolishing company tax in Ciskei

Abstract

The purpose of this paper is to examine the likely effect of the abolition of company tax on the Ciskeian economy. After considering the case for and against a corporate tax exemption, the issues involved are analysed on two levels. Using aggregate data, drawn from available census data, we find that most firms seem likely either to prefer the existing package of industrial concessions to the tax holiday, or to be indifferent to either option. Similarly, a recent survey of manufacturing enterprises in Ciskei indicated that the majority would prefer the incentive package. Firms that might be attracted by the tax‐free option are likely to be relatively profitable, subsidiaries of multinational companies, and enjoying a higher turnover per worker than firms opting for the incentive package.

Notes

Department of Economics and Economic History, Rhodes University, Grahamstown.