Personal income tax: Evidence from South Africa

Abstract

The purpose of this paper was to assess the nationalities of Personal Income Tax (PIT) payers. This study used critical data from three sources – the South African census (Statistics South Africa (Stats SA)), tax assessments and IRP5s (South African Revenue Service (SARS)). IRP5 is a document that is known as an employee's tax certificate which outlines the employer/employee's related incomes, taxes, and related deductions at the end of each year. Statistical Analysis System (SAS) was used to analyse the data. This study found that 3.7 million assessed taxpayers were identified as contributors of PIT in 2011. Of these PIT payers, 3,681,325 (2,091,615 males and 1,589,710 females) were born in South Africa; 71,404 (46,986 males and 24,418 females) were not born in South Africa; and 37,486 (807 males, 339 females and 36,340 unknown) could not be identified as they had no South African identity document. Data used in this study originated from the results of a survey organized by Stats SA and tax assessments supplied by SARS specifically for the period 2001. The study attempted to shed light on the national identity of taxpayers working in South Africa. For comparison purposes, tax assessment data constitutes the originality of this study, as obtaining consistent estimates of earnings mobility remains a non-trivial task in the country.

Keywords. Census; Tax assessment; IRP5; South Africa.

JEL. C88; D31; H24.