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Determinants of taxation in South Africa: an econometric approach

Author

Listed:
  • Hlongwane, Nyiko Worship
  • Daw, Olebogeng David
  • Sithole, Mixo Sweetness

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.

Suggested Citation

  • Hlongwane, Nyiko Worship & Daw, Olebogeng David & Sithole, Mixo Sweetness, 2022. "Determinants of taxation in South Africa: an econometric approach," MPRA Paper 114962, University Library of Munich, Germany, revised 12 Aug 2022.
    • Handle: RePEc:pra:mprapa:114962
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    File URL: https://mpra.ub.uni-muenchen.de/114962/1/MPRA_paper_114962.pdf
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    taxation; ARDL model; fiscal policy; South Africa;
    All these keywords.

    JEL classification:

    • C01 - Mathematical and Quantitative Methods - - General - - - Econometrics
    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • H30 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - General
    • H50 - Public Economics - - National Government Expenditures and Related Policies - - - General

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