ISP Working Paper Number 01-7

Fiscal Decentralization, Revenue Assignment, And The Case For The Property Tax In South Africa (379 KB)

by Roy Bahl, June 2001

Note:

• This document is available in PDF format by clicking the title above.
• You can request a hardcopy of this paper from our librarian, Gardner Neely.

Abstract:
South Africa is at a crossroads in its decentralization policy. On the one hand, it has declared its intention to strengthen the fiscal powers of local governments. On the other hand, the institutional arrangement necessary to guarantee fiscal decentralization, the power to raise local revenues, has not yet been fully defined. Nor has a target been set for the vertical division of resources between the central and lower levels of government. The revenue dimension of fiscal decentralization in South Africa is the subject of this paper. In this paper, we describe the system of local government and local government finance in South Africa. We turn then to a discussion of the normative criteria for proper revenue assignment in an intergovernmental system, and to an evaluation of each of the major revenue sources. In that context, we consider the potential role of the property tax as a source of financing local government in South Africa.