Economics at your fingertips  

Considering the efficacy of value-added tax zero-rating as pro-poor policy: The case of South Africa

Ada Jansen and Estian Calitz ()

Development Southern Africa, 2017, vol. 34, issue 1, 56-73

Abstract: The use of value-added tax (VAT) zero-rating has become widely accepted internationally to mitigate the regressivity of the tax. From an economic perspective, it remains contestable whether VAT zero-rating is the most cost-effective way of targeting the poor. This article addresses some topical issues on VAT zero-rating in South Africa. We first ask whether (conceptually) zero-rating should be a consideration within the context of tax theory literature, and then quantify the impact on the poor if zero-rating was to be removed, as well as the tax revenue implications thereof. We compare the cost of VAT zero-rating with the benefit, using data sourced from the Income and Expenditure Survey 2010/11 and the Estimates of National Expenditure. Our findings show that VAT zero-rating (compared with existing social transfer programmes) is not cost-effective when targeting the poor.

Date: 2017
References: Add references at CitEc
Citations: View citations in EconPapers (3) Track citations by RSS feed

Downloads: (external link) (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

Ordering information: This journal article can be ordered from

DOI: 10.1080/0376835X.2016.1269635

Access Statistics for this article

Development Southern Africa is currently edited by Marie Kirsten

More articles in Development Southern Africa from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().

Page updated 2022-09-07
Handle: RePEc:taf:deveza:v:34:y:2017:i:1:p:56-73