Equality and Personal Income Tax - The Classical Economists and the Katz Commission

Abstract

In reforming South Africa's personal income tax system, the Katz Commission relied heavily on equality and the constitution. It did not, however, explain its understanding of the meaning of equality in general or equality of taxation in particular, being content merely to mechanically remove what it perceived to be discriminatory words in the legislation. The meaning of equality of taxation on the other hand, was thoroughly debated by the classical economists. This article explains the classical economists' meaning of equality of taxation and demonstrates that the classical system of equality and that achieved by implementing the Katz Commission's recommendations are vastly different. In particular lower income groups, single income households and families are considerably worse off. Copyright (c) 2006 The Author. Journal compilation (c) 2006 Economic Society of South Africa.

A review of mining taxes in Africa: Tax burden, the strength of democratic systems and levels of corruption

“…The net result is that the average tax burden for flawed democracies (average TTB = 0.69) and authoritarian regimes is similar (average TTB = 0.68). Where democratic values are espoused, the importance of charging a fair rate of tax and ensuring a reasonable administrative load is essential (see Vivian, 2006). Consequently, while flawed democracies must charge taxpayers more to support legitimate government operations, they take measures to ensure that tax systems are relatively efficient and to promote certainty when dealing with the local tax authority.…”

“…To give a sense of the total tax burden (TTB) on mining companies in each African jurisdiction, a relative tax index is computed. The index is informed by the overriding requirement for tax to be charged only once and levied at a rate that does not compromise the taxpayer's long-term sustainability (Vivian, 2006). Related closely to this, the application of the respective tax laws should not result in undue administrative costs (Maroun et al, 2011;PwC, 2017).…”

A CGE Simulation Of A Flat Tax As A Possibility For Tax Reform In South Africa

“…Furthermore, the tax system could be made to be more competitive globally, and some new challenges facing the tax authorities are establishing common taxes for the African Union, policing tax havens and, in an effort to move with technology, creating tax systems for internet commerce (Surtees, 2001). Vivian (2006) also criticises the Katz Commission, arguing that it has not achieved its goal of equality by demonstrating that its results are vastly different to those that would indicate equality as understood by the classical economists. However, the effects of the Katz Commission and the tax reforms of the 1990s appear to be more positive than negative, with a great deal of tax relief and improved simplicity, lower incidence of tax avoidance and more efficient revenue collection than ever before (Pama, 2004).…”

The introduction of a gambling tax in South Africa: What are the odds on the implementation thereof?

“…South Africa's policy of levying both estate duty and capital gain taxes on the death of a taxpayer was never an intended policy outcome (De Jager, Parsons & Roeleveld, 2013). The current tax treatment not only results in a disconnect between South African and international tax practice (see De Koker & Williams, 2011), but in the double taxation of individuals contrary to the basic principles of tax fairness (De Jager et al, 2013;Vivian, 2006). As with CGT, allegations of unfairness, complications when applying the relevant legislation, and the high administrative burden (De Jager et al, 2013;De Koker & Williams, 2011) are unexpected difficulties that all too often characterise complex tax systems.…”

“…Government is of the opinion that this offers a means of expanding the tax base, a key policy consideration given high levels of unemployment and growing state expenditure (Gordhan, 2011;. In the context of a recessionary environment, the South African Revenue Service (SARS) would be able to collect additional revenues fairly (see Vivian, 2006, Gordhan, 2011. Where gambling constitutes a taxpayer's trade, incomes earned are, in substance, similar to those generated from other sources of employment (De Koker & Williams, 2011) and ought to be subject to either normal tax or a levy to promote parity in the tax treatment of similar incomes (Kreiser & Jowitt, 1993;Oosthuizen, 2010).…”