first ersa public economics workshop 12 august 2009
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First ERSA Public Economics
Workshop12 August 2009
OUTLINE
1. EQUITY & EFFICIENCY ISSUES (e.g. Progressivity; Regressivity; Fiscal Incidence)
2. TAX ISSUES (e.g. Simulations; Regional Integration)
3. EXPENDITURE ISSUES (e.g. Service Delivery; Infrastructure)
4. HUMAN CAPITAL ISSUES (e.g. Funding; Retention & Acquisition of Skills)
5. STRUCTURAL BUDGET BALANCE & FISCAL TARGETING (e.g. Potential GDP; Flexible Targets)
6. SOE’S (e.g. SAA; Privatisation)
7. POLLUTION / GLOBAL WARMING (e.g. Emission Fees; Tradeable Permits)
EQUITY & EFFICIENCY ISSUES
1.1 PYT – Decline in Progressivity ( Nyamonga & Schoeman, SAJE, 2007) Possible Extensions: • Applying one or both measures of progressivity over a longer time period;
disaggregating income into more cohorts (e.g. quintiles)• Impact on efficiency – work effort / labour force participation, saving
1.2 Indirect Taxese.g. VAT – Exemptions & Zero-rating (Katz Commission, 1995)• Has the Katz finding changed? New zero-rated goods & services?• Time series analysis of VATp / Y
d p and VATr / Yd r (see below); or
• Stoltz & Jansen: (VATi p / VATi ) / ( Yp / Yt ) with i = 1, 2, ....Excise & other Indirect Taxes – Tobacco & Alcohol Taxes (Stats SA; Black &
Mohamed, SAJE, 2006; World Bank.1999; Black, SAJE, 2008)• Intra-household distributional effects• Health effects• Tobacco smuggling: lower tax?• Alcohol & drunk driving: higher penalty & better law enforcement +
lower tax
EQUITY & EFFICIENCY ISSUES
1.3 Fiscal Incidence
• i.e Net effect of T Burden and G Benefits (Leistner; McGrath; Janish; Van der Berg)
• Re “secondary” & “primary” income: % of disposable income (Yt – Td )p spent on
indirect taxes, i.e. [ Ti / (Yt - Td ]p over time?
• Revisiting assignable (vs non-assignable) G – e.g. social transfers, education, health, housing
Use of quality indices – e.g. for education and health
• Re social transfers: intra-household distributional effects
• Efficiency effects: disincentive to labour force participation; saving
TAX ISSUES
2.1 CGE-based Simulations (McDonald & Punt, SAJE, 2004; McDonald, Reynolds & van Schoor, SAJE, 2006)
• Using CGE models to simulate impact of tax changes on GDP, sectors /
industries, employment and distribution – e.g. raising VAT (and lowering direct taxes); introducing multiple VAT; provincial surcharges; etc.
2.2 Regional integration – tax harmonisation (e.g. Steenekamp, SAJE, 2007 on VAT in SACU). Need for empirical analysis of various options, i.e. VAT adjustments
• Ditto excise and direct taxes
EXPENDITURE ISSUES
3.1 Service Delivery (Beier & Visser, SAJE, 2006; Booysen, SAJE, 2007)
• Bureaucratic red tape – different levels of government and financial responsibilities
• Tendering system • Incompetence, procrastination, slackness – e.g. lack of monitoring • Corruption
Is non- payment a disincentive?
• Community participation
EXPENDITURE ISSUES
3.2 Infrastructure (Fourie, SAJE, 2006; Bogetic & Fedderke, SAJE, 2006; Jansen & Schulz, SAJE, 2006)
• Comparative analyses of impact of different types of infrastructure on
GDP, employment and distribution – given budget constraint and need to prioritise
• Forecasting investment needs: extend Bogetic & Fedderke to include
transport infrastructure using different growth and equity scenarios
• Social infrastructure, e.g. education and health: coordination of gross capital and operational components of budgets, i.e. schools & teachers; clinics & health workers; management systems
• Simplify and streamline financial structures, e.g. transport
HUMAN CAPITAL ISSUES
4.1 Re NGT: Tertiary Education, HSRC, CSIR, Mintek • Funding: Borrowing as in case of physical capital?
Retention of skills, e.g. quid pro quo arrangements: minimum periods of work; exit taxes
• Acquisition of skills from abroad
5. STRUCTURAL BUDGET BALANCE & FISCAL TARGETS
(Siebrits & Calitz, SAJE, 2004; Burger & Jimmy, SAJE, 2006) • Expenditure, deficit, debt rules in other countries: why do they (not) work? • “Potential” GDP (or “full employment” / “natural” GDP): should it be
measured by using an HP filter to generate “the trend GDP” (re Burger & Jimmy)? Should “potential” GDP be defined in terms of available (local and imported) capital and labour resources, inter alia? During global upswings or downswings? Etc.
• Flexible target where deficit adjusts to ensure previous year’s or targeted
debt / GDP ratio is reached (Burger & Jimmy). But what should be SA’s targeted debt / GDP ratio?
• With discretionary policy still relevant, how long are the lags?
6. SOE’s
• SAA: reasons for failure; PPE to help turn it around?
• (Partial) privatisation candidates: ACSA, ports, gas & electricity distribution
7. POLLUTION / GLOBAL WARMING (Hahn, QJE, 1984; Gayer & Horowitz, 2006) • Emission fees; tradable pollution permits (“cap-and-trade”) • Congestion fees (“pricing”): e.g. Singapore’s electronic tolls; Norway and
London’s access charges + video cameras
TRANSPORT INFRASTRUCTURE : CURRENT FINANCING NETWORK National Treasury Dept of Public Enterprises National Department of Transport SAA
SARCC SANRAL ACSA Transnet Spoornet + Own Income NPA & SAPO Provincial Govs + Own Tax & Other Income
Municipalities
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