Prof Ada Jansen: South Africa can still improve its revenue-raising capabilities

(Picture: Profs Estian Calitz, Stan du Plessis, Ada Jansen, Nico Koopman, Ingrid Woolard and Michael Graham)

Prof Ada Jansen, chair of the Department of Economics at Stellenbosch University, recently delivered her inaugural professorial address to an audience of academics and guests at a function celebrating this important academic milestone. The topic of her address was "Tax revenue and development in South Africa: two sides of the same coin?"

Prof Jansen reiterated the important link between adequate fiscal resources for government to achieve essential developmental objectives including reduction in inequality and poverty, good health services and quality education, before asking whether South Africa, despite its favourable tax collection performance, is raising revenues as efficiently as possible. This question is especially pertinent given the current unfavourable economic and fiscal outlook. The answer is that there are still important gaps that can be addressed that could boost revenue without necessarily increasing tax rates. She continued by discussing policy reform options such as reducing or eliminating tax expenditures that that do not generate plausible social benefits (arguing for a comprehensive reconsideration of the merits of tax incentives), altering the tax treatment of retirement fund contributions, reconsidering VAT zero-rating and further improvements in tax administration.

An important caveat is that revenue reforms unaccompanied by appropriate choices on the expenditure side of the state’s budget, coupled with the institutional and administrative capacity to execute them, is unlikely to promote development effectively. In conclusion, Prof Jansen referenced preliminary research results from a behavioural perspective suggesting that willingness to contribute is not lacking, which bodes well for the future.

Click here to read more about Prof Ada Jansen on the University's news blog