 National and Regional Impacts of an Increase in Value‐Added Tax: A CGE Analysis for South AfricaElizabeth Lousia Roos, Mark Horridge, Jan H. van Heerden, Philip Adams (), Heinrich R. Bohlmann, Kgatedi Kenneth Kobe and Bokang Vumbukani‐Lepolesa South African Journal of Economics, 2020, vol. 88, issue 1, 90-120 Abstract: The South African National Treasury expected a revenue shortfall of R48.2 billion in 2017/18 and proposed tax policy measures to raise an additional R36 billion in 2018/19. A key component to raise the additional revenue was a 1% point increase in the VAT rate to 15% effective from 1 April 2018. The increase in the VAT rate was not welcomed as it would increase the cost of living, especially for the poor. We investigate the potential economy‐wide and regional impacts of raising VAT and increasing public spending on education and health. We do this by developing and applying a multi‐regional model of the South African economy that includes detailed tax and spending features. In this model, when we increase VAT, the impacts are driven by the direct shock to the model, accompanied by differences in regional economic activity. We find that effects on GDP vary between regions but are generally negative. Date: 2020 Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:bla:sajeco:v:88:y:2020:i:1:p:90-120 Ordering information: This journal article can be ordered from Access Statistics for this article South African Journal of Economics is currently edited by Philip A. Black More articles in South African Journal of Economics from Economic Society of South Africa Contact information at EDIRC. |
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