Author ORCID Identifier
Roy Bahl: https://orcid.org/0000-0002-7956-5076
South African local governments metropolitan (category A) and district ( category C) municipalities - rely heavily on revenues from the Regional Service Council (RSC) levy. The RSC levy is not one, but two taxes: a flat rate payroll tax and a flat rate turnover tax. This levy allows local governments to tap into the broad revenue bases of payroll and gross receipts, and to generate a significant revenue flow. But the RSC levy has a legal basis that makes it almost impossible to properly administer, and as a result it fails when measured against most of the criteria for a 'good' local tax. There have been numerous calls for its review and reform.
We begin this analysis with a question: How does the RSC levy match up against the norms for a good tax? We then turn to a study of the South African experience with this tax. In order to study the RSC levy, we analyzed available data and conducted interviews in a (nonrepresentative) sample of municipalities. Given the time frame of our work, the basic research necessarily focused on the pre-demarcation municipalities. In the results presented here, we first discuss the administration of the RSC levy. Next, we do a detailed, primarily economic evaluation of its current structure and performance. Finally, we review a number of possible options for reforming the RSC levy, outlining the advantages and disadvantages of each.
Bahl, Roy W. and David Solomon. “The Regional Services Council Levy,” Restructuring Local Government Finance in Developing Countries: Lessons from South Africa, Roy W. Bahl and Paul J. Smoke, eds. Cheltenham UK: Edward Elgar, 2003, 127-172.