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Periodical article Periodical article Leiden University catalogue Leiden University catalogue WorldCat catalogue WorldCat
Title:Trends in racial fiscal incidence in South Africa
Author:Van der Berg, S.ISNI
Periodical:South African Journal of Economics
Geographic term:South Africa
Subjects:fiscal policy
External link:https://onlinelibrary.wiley.com/doi/10.1111/j.1813-6982.2001.tb00012.x/pdf
Abstract:Fiscal incidence studies are concerned with questions of fairness or equity in economic, social and political life. They usually focus on the notion of equity of net gains and losses or the burdens and benefits of public expenditure to measure the political and policy priorities of the government. Under apartheid, economic inequality in South Africa had a strong racial dimension. Given the history of racial conflict in South Africa, fiscal incidence studies have focused on determining the extent of inequality in public expenditure among racial groups. This article presents a review of seventy years of fiscal incidence studies in South Africa, commencing with the first study carried out at the beginning of the 1930s by the Native Economic Commission. All the studies reviewed agree that the budget has been an instrument of limited redistribution to blacks since the late 1920s. Unquestionably whites paid far higher taxes under apartheid, and these were redistributed to provide services for the blacks. Thus fiscal distribution by race has long been more equal than the primary distribution of income, even though patterns of expenditure were still highly discriminatory and large post-budget racial welfare differentials remained. Redistribution actually increased during the apartheid years. By the time of democratization in 1994 the government had limited scope to use the budget to meet the high expectations of the newly enfranchized. Now the main fiscal challenge is to improve the efficiency of public resource use so as to enhance the quality of and access to services. Redistribution will have to occur in terms of primary or personal incomes, for which a pre-condition is the creation of employment. Bibliogr., notes.