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South African Journal of Industrial Engineering

On-line version ISSN 2224-7890
Print version ISSN 1012-277X

S. Afr. J. Ind. Eng. vol.20 n.2 Pretoria  2009


Finding the optimum level of taxes in South Africa: A balanced budget approach



N.J. SchoemanI; Y. van HeerdenII

IDepartment of Economics, University of Pretoria, South Africa,
IIDepartment of Economics, University of Pretoria, South Africa




This article is primarily concerned with assessing the optimum rate of government intervention by means of tax revenue policies that would facilitate the full growth potential of the South African economy, using time series data for the period 1960 to 2007. In the analysis a balanced budget is assumed, which means that the level of expenditure is set equal to tax collection with no provision for borrowing. The results indicate that the actual average tax burden far exceeds its optimum level, and that the authorities will have to consider adjusting tax policy accordingly in order to improve the growth performance of the economy.


Hierdie artikel het primêr ten doel die assessering van die optimale koers van belastinginkomstebeleid wat die volle groeipotensiaal van die Suid-Afrikaanse ekonomie sal ondersteun, deur gebruik te maak van tydreeksdata oor die periode 1960 to 2007. In die analise is 'n gebalanseerde begroting aanvaar, wat beteken dat die vlak van uitgawes gelyk gestel is aan die vlak van belastinginvorderings, en geen voorsiening word gemaak vir lenings nie. Die resultate dui daarop dat die werklike gemiddelde belastingdruk die optimale vlak aansienlik oorskry, en dat die owerheid moet oorweeg om die belastingbeleid dienooreenkomstig aan te pas om die groeipotentiaal van die ekonomie te verhoog.



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*Corresponding author
1 The author was enrolled for an MCom (Econometrics) degree in the Department of Economics, University of Pretoria.

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