Modelling value-added tax in South Africa: Assessing the distributional impact of VAT increases and zero-rating

As a part of the SA-TIED Seminar Series, researchers from the work stream on Public revenue mobilization for inclusive development will present the research findings of their recent working paper on South Africa's VAT increase and VAT zero-rating policy. The paper details the results of the team's analysis of the recent VAT increase and addition of new items to South Africa's list of VAT zero-rated products. Their analysis examines the distributional impact of this policy compared to alternative policy options using the South African tax-benefit Microsimulation Model (SAMOD) developed in collaboration with and housed at SASPRI. Their conclusions emphasize that the benefits of zero-rating VAT items do not extend to many of the lowest income households in South Africa and that an option to fund a new social grant through the potential revenue stream from ending zero-rating could have a broader positive impact.     

SA-TIED programme partners, stakeholders, and government officials are invited to attend the seminar to learn more about VAT policy in South Africa, the SA-TIED programme, and the utility of SAMOD to tax and benefit policy analysis.

The seminar is based on SA-TIED Working Paper #30.