The structure of personal income tax in times of inflation: a formula tax

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Periodical article

Title:	The structure of personal income tax in times of inflation: a formula tax
Authors:	Steyn, W. Fourie, F.C.v.N.
Year:	1996
Periodical:	South African Journal of Economics
Volume:	64
Issue:	4
Pages:	259-277
Language:	English
Geographic term:	South Africa
Subjects:	income tax inflation
External link:	https://onlinelibrary.wiley.com/doi/10.1111/j.1813-6982.1996.tb01341.x/pdf
Abstract:	Given the current distribution of income among taxpayers in South Africa, there are limits to the revenue that can be extracted from personal income tax if an equitable and efficient tax system is to be had. There are strong indications that personal income taxation, which contributes c. 40 percent to total tax revenue, has been overexploited as a revenue source in South Africa. The overreliance on this revenue source has already reached the point where the burden increasingly falls on low to middle-income households. This article proposes a formula tax which determines a set of average tax rates. Accepting the formula tax involves an undertaking by government that inflation will not be allowed automatically to change the distribution of taxation from that originally approved; it could ensure that changes in the distribution of taxation will be subject to more parliamentary and public debate; and although government will retain the right to make discretionary adjustments to the personal income tax, these would have to be made explicitly by reference to the initial position. App., bibliogr., notes.