COMPARINGTHE TREND BETWEEN SOUTH AFRICAN GOVERNMENT SPENDINGAND THE INCREASE INTAX REVENUE FOR THECOUNTRY’S TAXPAYERS

• Main Authors: Lerike Jacobs, Anneke Maré Moolman
• Format: Article
• Language: English
• Published: Social Sciences Research Society 2017-01-01
• Series: International Journal of Economics and Finance Studies
• Online Access: http://www.sobiad.org/eJOURNALS/journal_IJEF/archieves/IJEF_2017_1/l-jacobs.pdf

Adam Smithprovidesguidance through the four Canons of Taxation to assistgovernmenttodesign a good tax system based on a set of principles. These principles are being appliedthroughout the world, as well as in South Africa. However, the South Africangovernmenthasbeen challenged to reduce income inequality and promote growth. This has led to an increase ingovernmentspending.Although literature provides information about governmental spending, spending patterns have notbeen investigated. Therefore, this study followed a partially mixed sequential dominant statusdesign by investigating actual versus budgeted governmental tax revenue and spending, as well asthe relationship between governmental tax revenue, spending and the inflation rate. This was donefor the periodof2000 to 2007, seven years before the global financial crisisand 2008 to 2017,seven years after the global financial crisis. Qualitative data were collected by means of a literaturestudy to identify the main themes. The main themes were used in the investigation of the budgetsand compared to the budget reviews. Quantitative data were analysed to determine the correlationbetween governmental tax revenue, spending and the inflation rate. The findings suggest a strongcorrelation between governmental tax revenue and spending but a weak correlation between thegovernmental tax revenue, spending and the inflation rate.This study will enable South African stakeholders, including the country’s residents and potentialforeign investors, to determine the trend between governmental tax revenue, spending andinflation.