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The Impact of Taxes and Transfers on Poverty and Income Distribution in South Africa 2014/15


  • Maya Goldman
  • Ingrid Woolard
  • Jon Jellema


This paper applies the Commitment to Equity (CEQ) Assessment Framework to the 2014/15 Living Conditions Survey for South Africa to analyse the progressivity of the main tax and social spending programs and quantify their impact on poverty and inequality. The tax and social spending system is progressive - the burden of taxes falls on the richest in South Africa and social spending results in sizable increases in the incomes of the poor. Reductions in poverty and inequality are the largest achieved in the emerging market countries that have so far been included in the CEQ. The analysis by gender shows that the fiscal system is partially responsive to the additional burden of childcare borne by women through social transfers such as the child support grant and public healthcare and education services, and partially responsive to inequality of access to labour opportunities through the progressive direct taxation system. However, these impressive results are partly due to high levels of pre-fiscal inequality in the country and due to valuing in-kind benefits from free government services in education and health at the average cost of provision – they do not take into account the significant variation in the quality of the services provided.

Suggested Citation

  • Maya Goldman & Ingrid Woolard & Jon Jellema, 2021. "The Impact of Taxes and Transfers on Poverty and Income Distribution in South Africa 2014/15," Commitment to Equity (CEQ) Working Paper Series 106, Tulane University, Department of Economics.
  • Handle: RePEc:tul:ceqwps:106

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    References listed on IDEAS

    1. Marco Carreras & Purnachandar Dachapalli & Giulia Mascagni, 2017. "Effective corporate tax burden and firm size in South Africa: A firm-level analysis," WIDER Working Paper Series 162, World Institute for Development Economic Research (UNU-WIDER).
    2. Nora Lustig, 2017. "Fiscal Policy, Income Redistribution and Poverty Reduction in Low and Middle Income Countries," Working Papers 1701, Tulane University, Department of Economics, revised Aug 2017.
    3. Mr. David Coady & Mr. Sanjeev Gupta, 2012. "Income Inequality and Fiscal Policy," IMF Staff Discussion Notes 2012/008, International Monetary Fund.
    4. Lara Ibarra,Gabriel & Sinha,Nistha & Fayez,Rana Nayer Safwat & Jellema,Jon Robbert, 2019. "Impact of Fiscal Policy on Inequality and Poverty in the Arab Republic of Egypt," Policy Research Working Paper Series 8824, The World Bank.
    5. Marco Carreras & Chandu Dachapalli & Giulia Mascagni, 2017. "Effective corporate tax burden and firm size in South Africa: A firm-level analysis," WIDER Working Paper Series wp-2017-162, World Institute for Development Economic Research (UNU-WIDER).
    6. Alan Fuchs & Patricio V. Marquez & Sheila Dutta & Fernanda Gonzalez Icaza, 2019. "Is Tobacco Taxation Regressive? Evidence on Public Health, Domestic Resource Mobilization, and Equity Improvements," World Bank Publications - Reports 31575, The World Bank Group.
    7. World Bank Group, 2018. "Overcoming Poverty and Inequality in South Africa," World Bank Publications - Reports 29614, The World Bank Group.
    8. Ruth Hill & Gabriela Inchauste & Nora Lustig & Eyasu Tsehaye & Tassew Woldehanna, 2017. "A Fiscal Incidence Analysis for Ethiopia," Commitment to Equity (CEQ) Working Paper Series 41, Tulane University, Department of Economics.
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    Cited by:

    1. Maya Goldman & Ihsaan Bassier & Joshua Budlender & Lindi Mzankomo & Ingrid Woolard & Murray Leibbrandt, 2021. "Simulation of options to replace the special COVID-19 Social Relief of Distress grant and close the poverty gap at the food poverty line," WIDER Working Paper Series wp-2021-165, World Institute for Development Economic Research (UNU-WIDER).

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    More about this item


    fiscal policy; fiscal incidence; social spending; inequality; poverty; taxes; transfers; education; health; housing; South Africa;
    All these keywords.

    JEL classification:

    • H22 - Public Economics - - Taxation, Subsidies, and Revenue - - - Incidence
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution

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