UWCScholar :: Browsing by Author "Stoltz, Elizabeth"

Browsing by Author "Stoltz, Elizabeth"

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Economic appraisal of changes to the South African tax system since 1990
(University of the Western Cape, 2013) Ndofula, Elizabeth Jaria; Stoltz, Elizabeth
Countries reform their tax systems to improve economic and administrative efficiency, the impact on income distribution and their revenue-raising capacity. Globalisation has also affected the fiscal autonomy of countries and resulted in the reality of tax competition. The South African tax authorities have made significant changes to the tax system in over the past 20 years. The first phase occurred after the publication of the Margo Commission’s report in 1987 and the second phase followed the work done by the Katz Commission since 1996. The objectives of the reforms included the improvement of tax administration and collection, a re-evaluation of the efficiency and equity aspects of the different taxes, the broadening of the tax base, and most important, to bring the South African tax system in line with changing international tax practise.The main objectives of this study are to give a descriptive overview of the reforms, to investigate the economic rationale behind the reforms and to answer the question of whether the objectives of the reforms were actually achieved. The study fills an important void in the South African literature as it is the first comprehensive overview of the tax reforms since the 1990s.The nature of the study is qualitative and investigative. An overview of the theoretical literature is presented together with some evidence from developing countries. To determine whether the objectives were achieved, descriptive statistics are presented using secondary data from South African Revenue Service (SARS); National Treasury, the Organisation for Economic Co-operation and Development (OECD) and the South African Reserve Bank (SARB). The main findings are that the establishment of SARS contributed significantly to the administrative efficiency and revenue-raising capacity of the tax system. The taxing of fringe benefits under the personal income tax, the introduction of capital gains tax (CGT) and the residence-based principle contributed to the broadening of the tax base. The decrease of marginal rates of personal income tax (PIT) to be more in line with the rate on company income decreased the possibility of tax arbitrage. The phasing out of the secondary tax on companies together with the decrease of the rate of company income tax (CIT) increased the attractiveness of South Africa for capital-exporting countries. Significant tax relief to middle and lower-income earners over various years improved the equity impact. However it did not improve the position of the really poor, who are not liable for PIT. The increasing contribution of value-added tax (VAT) compensated to the decreasing contribution of trade taxes; the fact that the VAT rate has stayed constant, since 1993 is an indication of the unpopularity of the tax.
Government intervention to alleviate poverty in South Africa, with a specific focus on poverty in the Eastern Cape
(University of the Western Cape, 2014) Sithole, Nceba; Stoltz, Elizabeth; Yu, D.
When the new democratic government in South Africa came to power in 1994, it inherited a legacy of inequality, unemployment and poverty. Mindful of this triple challenge the government’s first socioeconomic policy framework, the White Paper on Reconstruction and Development (RDP) of 1994, stated the commitment to prioritise poverty eradication in South Africa. The Bill of Rights guarantees specific rights, referring to housing, healthcare and social security, to empower the poor. The greatest challenge facing the South African government was to provide the institutional support and to implement appropriate policies to reduce the extent of poverty and unemployment in South Africa. The government therefore established the necessary legislature and institutions and embarked on numerous policy strategies. A fact that complicates policy intervention is that the extent of poverty is very different across provinces. Households in rural areas are in a relatively worse position than households in urban areas and rural woman are in an even worse position. According to official statistics from Statistics South Africa, Limpopo and the Eastern Cape are the poorest provinces. This study investigated the nature of government intervention towards poverty relief. Through the use of various instruments, such as social grants, the delivery of basic services and housing, the government focuses on the relief of income, non-income and asset poverty. The main aim of this study was to answer the question of whether government intervention has made any difference to the quality of life of the poor. The situation of the Eastern Cape was investigated as a case study of the larger poverty problem and focused primarily on income, non-income and asset poverty. As is the position nationally, the majority of the poor in the Eastern Cape live in the rural areas and women and the youth are the worst affected groups. The empirical analysis shows that both income and non-income poverty has declined in Eastern Cape, particularly since 2000. The study also pointed out various instances of government failure and other specific challenges. However, despite the fact that poverty relief has been a policy priority since 1994 and despite numerous policies and programmes, the extent of poverty remains unacceptable.
Government intervention to alleviate poverty in South Africa, with a specific focus on poverty in the Eastern Cape
(University of the Western Cape, 2014) Sithole, Nceba; Stoltz, Elizabeth
When the new democratic government in South Africa came to power in 7994, it inherited a legacy of inequality, unemployment and poverty. Mindful of this triple challenge the government's first socio-economic policy framework, the White Paper on Reconstruction and Development (RDP) of 1994, stated the commitment to priorities poverty eradication in South Africa. The Bill of Rights guarantees specific rights, referring to housing, healthcare and social security, to empower the poor. The greatest challenge facing the South African government was to provide the institutional support and to implement appropriate policies to reduce the extent of poverty and unemployment in South Africa. The government therefore established the necessary legislature and institutions and embarked on numerous policy strategies. A fact that complicates policy intervention is that the extent of poverty is very different across provinces. Households in rural areas are in a relatively worse position than households in urban areas and rural woman are in an even worse position. According to official statistics from Statistics South Africa, Limpopo and the Eastern Cape are the poorest provinces. This study investigated the nature of government intervention towards poverty relief. Through the use of various instruments, such as social grants, the delivery of basic services and housing, the government focuses on the relief of income, non-income and asset poverty. The main aim of this study was to answer the question of whether government intervention has made any difference to the quality of life of the poor. The situation of the Eastern Cape was investigated as a case study of the larger poverty problem and focused primarily on income, non-income and asset poverty. As is the position nationally, the majority of the poor in the Eastern Cape live in the rural areas and women and the youth are the worst affected groups. The empirical analysis shows that both income and non-income poverty has declined in Eastern Cape, particularly since 2000. The study also pointed out various instances of government failure and other specific challenges. However, despite the fact that poverty relief has been a policy priority since 1994 and despite numerous policies and programmes, the extent of poverty remains unacceptable.
Graduate unemployment in South Africa: extent, nature and causes
(University of the Western Cape, 2012) Van de Rheede, Taryn Joy; Stoltz, Elizabeth; Yu, Derek
The South African economy faces a challenging socio-economic problem of high and persistent unemployment since the transition. Looking at the unemployment problem in greater perspective, numerous studies found that it is most serious amongst the youth. Since the beginning of the 2000s, a few studies focused particularly on youth and graduate unemployment, but there has been a lack of research in this area in recent years. Hence, this dissertation aims to fill some gap in the available research by investigating the extent, nature and causes of graduate unemployment in South Africa. This study firstly defined the relevant concepts and discussed some theories relevant to graduate unemployment, before reviewing the results of the past studies on the nature and extent of graduate unemployment. Thereafter, the possible causes were investigated, such as lack of experience, lack of soft skills, skills mismatch, poor quality of education of the graduates, discrimination by employers, etc. Graduate unemployment in India, China and Europe were also considered, and it was found that graduate unemployment was not in a unique problem in South Africa. The study proceeded with an analysis the Statistics South Africa 1995-2010 labour survey data and conducted more up-to-date statistical analyses of the profile of graduate unemployed. The results showed that the characteristics of unemployed graduates were, in general, the same as what was found by the previous studies, as graduate unemployed were more likely to be female and black, aged 15-34 years at the time of the survey, residing in Gauteng, with only post-Matric certificates or diplomas, and graduating from the fields of Business /Commerce / Management, and Education / Training / Development. The Oaxaca-Blinder decomposition was also applied, and the results indicated that employment discrimination against black graduates was very likely, after controlling for differences in demographic and educational attainment blacks and whites. Hence, the results of the empirical analysis showed that graduate unemployment persists. Finally, graduate employment elasticity coefficients and employment absorption rates were derived by educational attainment category, and the results showed that although graduate unemployment is clearly less serious than unemployment in other educational categories, the labour demand for graduates is not rapid enough to absorb all the graduates.
The impact of tax policy on foreign investment flows to capital-scarce economies
(2009) Massuanganhe, Egildo Gito Sabia; Stoltz, Elizabeth
Developing countries all over the world are competing for greater shares of foreign investment flows in a world where capital has become much more mobile. Also changes to tax policies have been implemented to make the domestic economies of host countries more attractive in the eyes of foreign investors.South Africa is an example of a capital-scarce country requiring much higher and more sustainable levels of foreign investment in order to reach the growth target as envisaged by AsgiSA. This problem is exacerbated by the current deficit on the current account of the balance of payments, together with the extremely low rate of national savings.Recent empirical findings indicate that various aspects of tax policy (nominal versus effective rates of company tax, tax incentives, accelerated depreciation allowances,etc) do affect investment decisions and that harmonisation of tax policies is important.It emphasises that tax policy is a very important aspect considered by multinational companies in their investment decisions. It therefore cannot be ignored by policy makers in capital-scarce countries.The study presents an economic appraisal of the South African situation in the context of important lessons which can be learnt from behavioural responses to international tax rules. It finds inter alia that along with other countries, such as Ireland and Singapore, South Africa implemented various changes, such as reducing the nominal and effective rates of company tax. Another example is the recent announcement of the phasing out of the secondary tax on companies. However, studies also indicate that, although not a first best solution, the use tax incentives is standard practice which cannot be ignored. Uncertainty regarding tax policy also seems to impact on the host country’s ability to attract foreign investment inflows and may even result in disinvestment. A case in point is the recent disinvestment from the South African mining sector.
Improving the targeting of zero-rated basic foodstuffs under value added tax (VAT) in South Africa - An exploratory analysis
(Stellenbosch University, 2012) Yu, Derek; Jansen, Ada; Stoltz, Elizabeth
VAT without any exemptions or zero-rating is regressive. Since the inception of VAT in South Africa, there has been an ongoing debate around the issue of zero-rating to alleviate the burden on poor households. This paper uses vegetables as an example and conducts tax incidence analyses to compare the relative burden of VAT on vegetables for various income groups. It finds that differential treatment of the zero-rating of VAT on various categories of vegetables could be beneficial in terms of relative equity gains. It is suggested frozen vegetables remains zero-rated, whereas canned vegetables and some fresh vegetables items be zero-rated.
An investigation into the impact of the privatization of public utilities on the affordability of and access to basic services to poor households in developing countries: lessons for Rwanda
(University of the Western Cape, 2005) Bakazi, Annet Baingana; Stoltz, Elizabeth; Dept. of Economics; Faculty of Economics and Management Sciences
Three arguments are normally presented as rationale for the privatisation of state owned enterprises. The first relates to the problem of the financing of higher levels of public expenditure; the second is based on the viewpoint that private ownership is more efficient than public ownership; whilst the third claims that the losses of inefficient public enterprise are responsible for excessive budget deficits and other fiscal problems. Although empirical evidence proves that privatisation enhances economic efficiency, it negatively affects the affordability of and access to essential services, which may have serous consequences for poorer households. This happens through increased prices of essential services, such as electricity and telecommunication, as well as through loss of employment opportunities during and after privatisation. Many countries, also in Africa, implemented various types of privatisation programmes over the past two decades in order to decrease the relative size of governments and to improve efficient delivery of services. Towards the end the 1990’s and after the tragic genocide, Rwanda’s Government of National Unity also embarked on an ambitious restructuring programme of its state-owned enterprises. The main purpose of this study was to assess the likely impact of privatisation on poor households in developing countries. The report presents a general overview of the literature, with a specific focus on Brazil, Argentina and South Africa. It investigates the experiences of these countries and derives lessons that can be learnt. Finally it assesses the possible impact of the privatisation of essential service delivery on poor households in Rwanda. The main conclusion of the study is that governments should look beyond efficiency benefits of restructuring and focus on the overall opportunity cost of the privatisation of essential service delivery. The specific method of privatisation may determine the final social impact. The case studies also highlight the need for more research into the challenges facing the privatisation of essential service delivery. It is clear that any restructuring should be preceded by a thorough analysis of the likely impact on the poorer sections of the community.
An investigation into the negative external impact of water pollution, public policy options and coping strategies --with specific references to the Lotus River Catchment area
(University of the Western Cape, 2005) Moses, Mariana; Stoltz, Elizabeth; Dept. of Economics; Faculty of Economics and Management Sciences
The main purpose of this study was to assess the negative external impact of water pollution upon water resources and the users thereof within urban areas.
An investigative analysis into the saving behaviour of poor households in developing countries: with specific reference to South Africa
(University of the Western Cape, 2007) Nga, Marie-Therese; Stoltz, Elizabeth; Dept. of Economics; Faculty of Economics and Management Sciences
In South Africa, as in many developing countries, most households are poor and do not save, as a result of which they do not acquire any positive net worth and which also constrains access to formal means of finance. South Africa is a consuming nation, with increasing ratios of household consumption resulting in dissaving and often unsustainable levels of household debt, which is also stimulated by the current lower level of interest rates. This situation is worse amongst poorhouseholds who also often experience financial shocks, for instance because of the death of family membersas a result of HIV/AIDS. This report provided an overview of household saving in South Africa for the period 1983 to 2003. It identified the main factors responsible for the lack of a commitment to saving which are particularly relevant in the case of poor households.
Regional integration in Southern Africa with a specific focus on the challenge of multiple membership, using SADC as a case study
(2009) Ngenyeh, Kangami Divine; Stoltz, Elizabeth
Regional integration dates back to the work of Jacob Viner who distinguished between the terms ‘trade creation’ versus ‘trade diversion’ in the context of the gains from customs unions. Since then regional trade agreements have been entered into all over the world and almost all members of the World Trade organisation are members of at least one trade agreement. Moreover, individual countries have also signed free trade agreements with countries not involved in the same regional block. Also, in this era of globalisation, the demands of the WTO often work against progress to deeper integration in the specific regions.Despite their relatively weak performance, Africa is home to the largest number of regional trade agreements where member states of a particular regional trade block also belong to anther regional block or have signed preferential trade agreements with third countries. This phenomenon of multiple memberships is particularly true of trade blocks in Southern Africa. For example, the DRC, Malawi, Angola, Madagascar, Mauritius, Swaziland, Zambia and Zimbabwe are members of SADC, but also full members of COMESA.This report presents a study on regional integration in Southern Africa and specifically focuses on the presence of overlapping memberships in Southern and Eastern Africa. It provides a descriptive overview of COMESA, the EAC, SACU and SADC where member countries of the former blocks are also members of SADC, but focuses specifically on the problems and challenges due to multiple memberships, such as different approaches to regional integration, problems related to different rules of origin and non-tariff barriers, amongst others.Thereafter the focus is on SADC as regional trade block. The report discusses the establishment of SADC, its main aims and economic performance since its inception and also the special problems and challenges, such as the multiple memberships of its members. Finally South Africa’s preferential trade agreement with the European Union is discussed as example of how multiple membership impact on the development of trade relations between member countries of SADC.
Science parks as mechanism to enhance the development of a knowledge-based economy in Mozambique
(University of the Western Cape, 2012) Mhula, Alexandra Luis; Stoltz, Elizabeth
The 21st century marked the beginning of an era in which countries became increasingly dependent on information and communication technology (ICT). Technological change has not only become one of the key contributors to economic growth, it is also regarded as an essential element to enhance the general welfare of society (Hu, 2006). Not surprisingly, even governments of developing countries undertake various activities aimed at internalising the positive external impact of technological innovation in order to enhance the development of knowledge-based economies. Examples are the provision of basic information services, such as telephone- and internet services as well as distance learning technologies to make education more generally accessible. Another instrument that recently gained worldwide interest is the development of science parks, also known as information technology (IT) parks, techno parks or cyber parks. The rationale is to promote technological change, regional and/or urban development and to facilitate the diffusion of knowledge and technology through the establishment of knowledge networks. In 2004 there were approximately 600 science parks in the world, 70 percent of which were situated in the United States of America, Europe and Asia, but there is a growing trend towards its establishment in developing countries. However, the financing of such mega-projects in developing countries is especially problematic. A science park can be provided as a pure public project or pure private or through public-private partnerships (PPPs). Pure public financing is usually found in countries that have strong public sectors, such as China and India. On the other hand, in countries with well-developed private sectors they are mostly privately financed. In the case of most developing countries, private sectors are generally not developed enough and the public sectors cannot afford to finance projects of such a nature on a sustainable basis. These countries have no other option but to investigate the possibility of some other variation of a public-private-partnership (PPP) model.The Mozambican government acknowledges the urgency to enhance the development of a knowledge based economy and regards the establishment of a science park as a necessary policy intervention to provide the institutional basis for the diffusion of technological and communication innovation. As a result the country launched its first science park, to be developed in different stages, in 2008. But the real challenge for Mozambique lies in the financing of the park. It was estimated that only the first phase will require about 25 million USD. These funds were secured from the Indian government in the form of a loan. However, the government of Mozambique relies to a large extent on foreign aid to balance the national budget and there are no surplus funds to secure the sustainability of a project of such magnitude. This study firstly explored the economic rationale behind the establishment of a knowledgebased economy and the development of ICT. It then focused on science parks as institutions to secure the diffusion of technological innovation in Mozambique and also on empirical evidence from countries that have benefited greatly from investment in science park projects. The study also investigated the possibility to use a PPP-type of project to finance the science park in Mozambique and pointed out very important determinants for the successful implementation of PPP-projects. The study showed that the government of Mozambique is serious in its efforts to develop a knowledge-based economy although many projects are still in their 'infant' stages. It is strongly recommended that policy makers in Mozambique should study the outcomes of empirical research on various science parks projects in other developing countries. The study shows that Brazil seems to be successful in its use of a PPP for the country's science parks. Policy makers should also pay careful attention to other PPP-projects in Mozambique. Although they are mostly used for infrastructural projects, some failed, while others seem to be functioning efficiently and important lessons can be derived.
A study of the factors determining the choice of exchange rate regime: with specific reference to China
(University of the Western Cape, 2007) Tang, Liang; Stoltz, Elizabeth; Dept. of Economics; Faculty of Economics and Management Sciences
Since the 1980s China had different exchange rate regimes. For example, in 1981, a dual-exchange rate system was introduced, with the official exchange rate applying to non-trade-related foreign exchange transactions and the depreciated internal settlement rate (ISR) applying to trade related transactions. This system was discontinued in 1985, but after the establishment of special economic zones to boost the country's export performance, the dual-exchange rate system was reintroduced in 1986. In 1994 the country informed the IMF that it will be switching to a managed floating exchange rate system and this was the official policy for almost ten years. However, de facto, the country chose to peg its currency to the USD during all these years (whilst Japan was the most important trading partner).The report provides a descriptive analytical overview of how China in this era of globalization and with the importance of the World Trade Agreement, managed to keep its currency pegged to the USD over such a long period of time. The most important factors explaining this choice were identified as the desire to stimulate export-let economic growth, the risk related to capital mobility, financial sector liberalization, relative price level stability, dollarization and politics.

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