Determinants of taxation in South Africa: an econometric approach

Nyiko Worship Hlongwane, Olebogeng David Daw and Mixo Sweetness Sithole

MPRA Paper from University Library of Munich, Germany

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.

Keywords: taxation; ARDL model; fiscal policy; South Africa (search for similar items in EconPapers)
JEL-codes: C01 H2 H30 H50 (search for similar items in EconPapers)
Date: 2022-08-30, Revised 2022-08-12
New Economics Papers: this item is included in nep-pbe
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