The Impact of the Dividend Tax in South Africa: A Dynamic CGE Model Analysis

Lumengo Bonga-Bonga and Jean Luc Erero
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Jean Luc Erero: University of Johannesburg, South Africa

Economia Internazionale / International Economics, 2019, vol. 72, issue 2, 185-208

Abstract: This paper analyses the economy-wide impact of the dividend tax (DT) on the South African economy, which was increased from 10% to 15% by the government in 2012. The analysis was conducted using a dynamic computable general equilibrium (CGE) model of South Africa, which captured the observed structure of South Africa’s economy. The parameters of the CGE equations were calibrated to observed data from a social accounting matrix (SAM) for 2010. The simulation results show that the policy impact of increasing the DT has a positive effect on the reported macro-economic variables at the outset of this policy and in the near future. For example, GDP is expected to increase by 0.059% and 0.601% in 2013 and 2019 respectively. Moreover, the simulation results show that the substitution effect dominate the income effect of the taxation of dividend for high skill labours in South Africa. L’impatto dell’imposta sui dividendi in Sud Africa: un’analisi sul modello dinamico CGE Questo studio analizza l’impatto sull’andamento dell’economia in Sud Africa della politica di aumento dell’imposta sui dividendi (DT) che è passata dal 10% al 15% dal 2012. L’analisi si basa su un modello CGE (computable general equilibrium) dinamico in grado di cogliere la struttura dell’economia sudafricana. I parametri delle equazioni CGE sono stati calibrati sui dati osservati da una matrice SAM (social accounting matrix) nel 2010. I risultati della simulazione mostrano che la politica di aumenti dell’imposta sui dividendi ha un effetto positivo sulle variabili macroeconomiche prese in considerazione nella fase iniziale e nell’immediato futuro. Ad esempio, la stima di crescita del PIL è 0.059% e 0.601% nel 2013 e nel 2019, rispettivamente. Inoltre, i risultati di simulazione mostrano che l’effetto sostituzione domina l’effetto reddito della tassazione dei dividendi per lavori altamente qualificati in Sud Africa.

Keywords: Dividend Tax; Secondary Tax on Companies; CGE Model; South Africa (search for similar items in EconPapers)
JEL-codes: D33 D58 H25 (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (1)

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