ECONOMIC IMPACT OF A PROVINCIAL FUEL LEVY: A CGE ANALYSIS

Scott McDonald (), Sanri Reynolds and Melt Van Schoor

South African Journal of Economics, 2006, vol. 74, issue 3, 422-441

Abstract: Provincial governments in South Africa, commencing with the Western Cape, are expected to institute provincial fuel levies in addition to the existing national fuel levy in future. This paper presents results from a Computable General Equilibrium (CGE) model calibrated with a detailed Social Accounting Matrix (SAM) to evaluate the effects of a 3 per cent provincial fuel levy implemented simultaneously in all provinces. The results are presented for the petroleum products market, government, the macro economy, industries, factor income (including employment) and household income and expenditure. Results indicate that although the impact of the fuel levy is not drastic, it is large relative to the expected revenue gain. The impact is distributed more uniformly than was expected.

Date: 2006
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https://doi.org/10.1111/j.1813-6982.2006.00078.x

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