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- Title
SOME WELFARE IMPLICATIONS OF A LAND TAX ON THE WESTERN CAPE.
- Authors
McDonald, Scott; Punt, Cecilia
- Abstract
This article makes a contribution to the debate by providing a quantitative analysis of the direct and indirect effects of a land tax in the Western Cape, South Africa. The analyses are carried out using a computable general equilibrium model calibrated to a social accounting matrix for the Western Cape. It is estimated that a land tax rate of higher than 2 per cent would tax away the economic returns to holding land in agriculture. Estimated changes in the gross regional product of the Western Cape indicated a very small impact. If the land tax revenue is spent in the province there is a slight increase in the gross regional product. Price changes, including those on food products, are insubstantial. The agricultural activities/regions react differently to the introduction of a land tax, with increasing production in some regions and decreasing production in others. The small scale of the impacts of the simulations is generally robust to the selected model closure conditions, although choice of model closure does influence the signs on the results.
- Subjects
WESTERN Cape (South Africa); SOUTH Africa; PROPERTY tax; QUANTITATIVE research; SOCIAL accounting; TAXATION; INTERNAL revenue
- Publication
South African Journal of Economics, 2004, Vol 72, Issue 4, p808
- ISSN
0038-2280
- Publication type
Article
- DOI
10.1111/j.1813-6982.2004.tb00135.x