Effectiveness and Economic Impact of Tax Incentives in the SADC ...

VIII EFFECTIVENESS AND IMPACT OF TAX INCENTIVES IN THE SADC REGION
Several limitations bear mention. First, in accordance with the SOW, the study focuses on tax
incentives operating through the company income tax (though it touches on interactions
between the company and personal tax systems, as well as indirect tax incentives).
Second, because the study covers the entire SADC region it is not possible to probe the
intricacies of the tax systems in every country. Instead, we address main points of the various
systems. The primary resource for this purpose is a preliminary version of the SADC Tax
Database (August 2003). Supplementary data were obtained from public documents and
websites of member governments, international organizations, and private accounting firms,
as well as consulting studies and academic papers. Because tax laws change frequently, some
information presented here may be out of date. We welcome corrections.
Third, without access to microeconomic data on investment projects or taxpayer records, we
built our analysis on principles of tax policy, lessons from international experience, findings
of the professional literature, simulations using illustrative cases, and macroeconomic data. 1
The author, Dr. Bruce Bolnick of Nathan Associates Inc., would like to express special thanks
to Martin Grote and David Hollinrake at the National Treasury in South Africa for their
valuable information and comments; to Moeketsi Senaoana, Senior Macroeconomic Policy
Advisor at SADC/TIFI for support and information; to Sebastian James, at the Kennedy
School of Government at Harvard University, for his excellent research assistance; and to
Anthony Pellechio at the IMF for providing an updated version of his Marginal Effective Tax
Rate model (with David Dunn) for use in the study and permission to distribute copies to the
Tax Subcommittee.
Dr. Bolnick also benefited from background studies prepared by Thabo Legwaila at
Stellenbosch University, Arbind Modi at the Ministry of Finance in India, and Danies
Chisenda at the Ministry of Planning and Finance in Zambia, as well as information provided
by Domingos Julio Inacio at the Ministry of Finance in Angola, Duraiswamy Ravindran at the
Ministry of Finance and Development Planning in Botswana, Happyson Nkya at the Tanzania
Revenue Authority, and Rory Allan at UNCTAD’s Division on Investment, Technology and
Enterprise Development. In addition, he benefited from discussions with Louis Wells at the
Harvard Business School, Andrea Viol at the Kennedy School of Government, Graham
Glenday at the Duke Center for International Development, and Frank Flatters from Queens
University.
Dr. Bolnick wishes to thank those who kindly provided both time and information during his
field visit in March, 2003, including (in Gabarone) Fudzai Pamacheche and Rosalind Thomas
at the SADC Secretariat; Stanley Mupanomunda at USAID/RCSA; Ms. Iponeng Sennanyana
at the Ministry of Finance and Development Planning; Lameck Nthekela at the Botswana
1 The original SOW called for microeconomic data analysis, but when this proved not to be possible SADC and
USAID approved the revised methodology when the study commenced.