Abstract
M.Com. (Taxation)
The transition of South Africa to a democracy signifies large-scale changes in the
political and economic spheres. The public sector, one of the main participants in
the economy, does not escape this transformation. A more democratic structure
entails, inter alia, increased empowerment of sub-national levels of government. This
means that various functions must be devolved to provinces along with certain
revenue sources in a bid to increase their autonomy and efficiency in service
delivery.
The fundamental aim of this paper is to analyze the intended future constitutional
order of South Africa according to theoretical principles of decentralisation and tax
devolution, and to propose a suitable tax framework for the new order. A primary
prerequisite for a new tax structure is that the economic return on the revenue
absorbed by government should be maximised. The problem is that some taxes are
suitable for devolution and some should remain in the control of the national
government. Furthermore, existing tax structures have to be considered when
devising new tax frameworks.