The Tax base of South African individuals : an international comparison

South Africa changed its tax system from a source-based to a resident-based system in 2001. This change is in line with tax reforms worldwide. However, over the last two decades, personal income tax reforms have not resulted in a noticeable increase in tax revenue worldwide, even though governments find themselves hard-pressed to maintain or increase their expenditure. The aim of this study was to compare the South African tax base, which relies on taxing individuals, with the tax base used in another developing country, namely India, as well as to those applied in two developed countries, namely the United Kingdom (UK) and the United States (US). This comparison identified similarities and differences between the countries, and highlighted possible improvements to South African tax legislation in order to broaden the country‟s tax base and potentially increase tax revenues. For the purposes of the study, a tax base can be defined as the total income of an individual, after allowing for specified deductions, allowances and other adjustments, on which tax is levied. It was determined that the tax base used in South Africa is similar in some respects to those used in India, the UK and the US. An improvement that South Africa could adopt is the inclusion of the annual value of house property, as specified in the Indian tax system. The employment abroad exclusion from income could be replaced by a foreign-earned income exclusion, as applied in the US tax system. It was also determined that permitting certain deductions could in fact increase the tax base, as these deductions could entice taxpayers to register for tax, therefore increasing tax compliance and ultimately increasing tax revenue. By adopting any of the advantages of the other tax systems, South Africa can broaden its tax base and generate additional tax revenue to support the government‟s needs.

Grantor dc:publisher

University of Pretoria

Year dc:date.issued

2013

Advisor dc:contributor.advisor

• Venter, Elmar Retief

• Tax base
• Resident-based
• Source-based
• South Africa
• India
• United Kingdom
• United States
• UCTD

Statement dc:rights

• © 2014 University of Pretoria. All rights reserved. The copyright in this work vests in the University of Pretoria. No part of this work may be reproduced or transmitted in any form or by any means, without the prior written permission of the University of Pretoria.

Language dc:language.iso

en

Dc Identifier Other

F14/4/507/gm

OAI identifier oai:identifier

oai:repository.up.ac.za:2263/41455