Abstract
M.Comm. (Economics)
The Gauteng provincial government is currently exploring possible sources for raising revenue to finance the increasing demand in social services. In the current fiscal stance, the bulk of provincial government revenue is constituted of funds transferred from the national government in the form of equitable share to provinces. Thus, the main purpose of this study is to assess the overall impact of the increase in the motor vehicle license fees and tourism levy, as important sources of the Gauteng provincial government own sources of revenue, on economic activities in the Gauteng Province. The study uses the provincial Computable General Equilibrium (CGE) model to simulate an increase in motor vehicle license fees and tourism levy, and to determine how such increases in taxation will affect provincial socio-economic variables such as the gross domestic product (GDP), employment and household consumption expenditure. The findings of the study are that a 10% increase in motor vehicle license fees or tourism levy negatively affects the Gauteng GDP, employment and household consumption. Nonetheless, the effect on provincial government revenue is positive. Given the negative effect of such an increase in taxation on key socio-economic variables, the study suggests that an increase in taxation on motor vehicle license fees or tourism levy should not be considered as options for raising revenue for the Gauteng Province.