Abstract
Taxation in South Africa will increasingly have to focus on political and economic developmental demands. Two important lessons from the experience of developing countries with taxation and tax reform are that the tax system should aim at not taxing the poor (rather than trying to level down the income of the rich) and that tax policy has a special role to play in generating revenue for development, a role which it should endeavour fill in a neutral way. With these lessons in mind taxation and tax reform are analysed in South Africa. It is concluded that the tax system is relatively efficient but that there has been retrogression in attaining equity objectives.
Notes
This article is part of an unpublished research report for the Unit for Fiscal Analysis: Department of Finance. The authors are indebted to two anonymous referees for helpful comments made on an earlier draft of this paper. The views expressed here are those of the authors.
Associate Professor and Professor, respectively, Department of Economics, Unisa.