Determinants of taxation in South Africa: an econometric approach

Hlongwane, Nyiko Worship and Daw, Olebogeng David and Sithole, Mixo Sweetness (2022): Determinants of taxation in South Africa: an econometric approach.

Abstract

The study analyses the determinants of taxation in South Africa for the period from 1972 to 2021. The utilised borrowed time series data from the World Bank. The study employed economic growth, trade, inflation, and government expenditure as control variables. The study performed ADF and PP unit root test, ARDL Bounds test to cointegration, optimal lags model and residual diagnostics. The results of the ARDL model revealed that government spending is a positive statistically determinant while inflation and trade negative statistically significant determinants of taxation in both the short and long run period. Economic growth was found to be a positive statistically significant determinant in the short run while negative statistically insignificant determinant of taxation in the long run. The study provided several policy recommendations such as boosting government expenditure to increase tax collected while revising policies on inflation and trade.

• Item Type: MPRA Paper
• Language: English
• Keywords: taxation; ARDL model; fiscal policy; South Africa
• Subjects: C - Mathematical and Quantitative Methods > C0 - General > C01 - Econometrics; H - Public Economics > H2 - Taxation, Subsidies, and Revenue; H - Public Economics > H3 - Fiscal Policies and Behavior of Economic Agents > H30 - General; H - Public Economics > H5 - National Government Expenditures and Related Policies > H50 - General

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