Policy dialogues — Fiscal planning, effective revenue mobilization, and the role of collaborative research in policy evaluation

The policy choices that impact South Africa's fiscal framework have dramatic implications for the long-term sustainability of government finances and potential growth and development. This has never been more apparent than today, as South Africa faces stark fiscal choices that almost certainly imply a trade-off between the three objectives of counter-cyclicality, debt-sustainability, and intergenerational equity. As seen globally, long-term implications are sometimes overlooked.

To guide policy makers, the conversation considered the incidence of the current taxation regime and the implications this has for the effectiveness of the tax systems in the attainment of revenue, redistribution, and economic growth. In addition, the demographic trends of the population were shared and their impact on the tax base and the potential demand for future services was considered.

The programme also included a discussion on deepening the value of collaborative research between policy makers and independent experts as it pertains to improved monitoring, evaluation, and innovation in the area of policy tools for inclusive economic development. Building evidence through research advancement is fundamental to the effective delivery and implementation of public policies.

Within the SA-TIED programme, a number of papers have used tax data to better understand the impacts and unintended consequences of some of South Africa's tax policy instruments. This includes evaluations of the employment tax incentive, the research and development incentive, small business tax incentives, the value-added tax, the corporate income tax, and corporate tax allowances, among others. The critical insights from these papers were shared with the audience and discussed by policy makers.