The effect of value-added tax on economic growth in South Africa

Abstract

The study investigated the effect of value-added tax on economic growth in South Africa using the Autoregressive Distributed Lag (ARDL) bounds tests approach for cointegration for the period 1991 to 2020. The results of the study showed that there was a long-run relationship between the variables when investment was used as the dependent variable. The results of the ECM showed that GDP growth had a significant and positive effect on investment, while VAT had a positive but non-significant effect on investment. The causality test results showed that GDP Granger-cause investment, and that a bi-directional causal relationship existed between VAT and investment. These results therefore prove that growth could be achieved in South Africa when government allocates the revenue raised through a well-designed value-added tax to productive expenditure, such as human capital, research and development and investing in infrastructure. In other words, the findings of the study confirms that VAT has the potential to impact economic growth when the increased revenue is allocated towards well-targeted investment. To mitigate the adverse effect of a VAT increase on the disadvantaged, this could be addressed by diverting the revenue back to the poor through increased spending on housing and health to reduce poverty and inequality.

Patlisiso e batlisitse sephetho sa lekgetho la boleng bo ekeditsweng ho kgolo ya moruo Afrika Borwa ka ho sebedisa mokgwa wa diteko tsa mellwane tsa Autoregressive Distributed Lag (ARDL) bakeng sa kopanyo bakeng sa nako ya 1991 ho isa ho 2020. Diphetho tsa phuputso di bontshitse hore ho bile le nako e telele kamano pakeng tsa mefuta-futa ha matsete a ne a sebediswa e le phapang e itshetlehileng ka yona. Diphetho tsa ECM di bontshitse hore kgolo ya GDP e bile le phello e kgolo le e ntle ho tsetelo, ha VAT e na le phello e ntle empa e se ya bohlokwa ho tsetelong. Diphetho tsa diteko tsa causality di bontshitse hore matsete a GDP Granger-cause, le hore kamano ya mabaka a mabedi e teng dipakeng tsa VAT le matsete. Ka hona, diphetho tsena di paka hore kgolo e ka fihlellwa ka hara Afrika Borwa ha mmuso o abela lekeno le bokelletsweng ka lekgetho le hlophisitsweng hantle la boleng ba ditjeho tse hlahisang tlhahiso, tse kang bokgoni ba batho, dipatlisiso le ntshetsopele le matsete ho meralo ya motheo. Ka mantswe a mang, diphuputso tsa phuputso di tiisa hore VAT e na le bokgoni ba ho ama kgolo ya moruo ha lekeno le eketsehileng le abelwa matsete a rerilweng hantle. Ho bebofatsa phello e mpe ya keketseho ya VAT ho ba hlokisitsweng, sena se ka rarollwa ka ho kgutlisetsa lekeno ho ba futsanehileng ka ho eketseha ha tshebediso ya chelete matlong le bophelo bo botle ho fokotsa bofuma le ho se lekane.

Die studie het die effek van belasting op toegevoegde waarde op ekonomiese groei in Suid-Afrika ondersoek deur gebruik te maak van die Outoregressiewe Verspreide Lag (ARDL) grenstoetsbenadering vir koïntegrasie vir die tydperk 1991 tot 2020. Die resultate van die studie het getoon dat daar 'n langtermyn was verband tussen die veranderlikes wanneer belegging as die afhanklike veranderlike gebruik is. Die resultate van die ECM het getoon dat ekonomiese groei 'n beduidende en positiewe uitwerking op investering gehad het, terwyl belasting op toegevoegde waarde 'n positiewe maar nie-beduidende uitwerking op investering gehad het. Die oorsaaklikheidstoetsresultate het getoon dat ekonomiese groei Granger investering veroorsaak, en dat 'n tweerigting-oorsaaklike verband tussen belasting op toegevoegde waarde en investering bestaan het. Hierdie resultate bewys dus dat groei in Suid-Afrika behaal kan word wanneer die regering die inkomste wat verkry word deur 'n goed ontwerpte belasting op toegevoegde waarde toewys aan produktiewe uitgawes, soos menslike kapitaal, navorsing en ontwikkeling en investering in infrastruktuur. Met ander woorde, die bevindinge van die studie bevestig dat belasting op toegevoegde waarde die potensiaal het om ekonomiese groei te beïnvloed wanneer die verhoogde inkomste aan goedgerigte belegging toegewys word. Om die nadelige uitwerking van 'n belasting op toegevoegde waarde verhoging op die benadeeldes te versag, kan dit aangespreek word deur die inkomste na die armes terug te lei deur verhoogde besteding aan behuising en gesondheid om armoede en ongelykheid te verminder.