How tax strategies impact on the Social Economic Problem?
We are going to highlight some social issues and whether the tax strategy is effective in dealing with the issues. The issues discussed include the issue of urbanisation on vacant land, child poverty, inflation and unemployment.
Issue 1: Tax Penalty: Eliminate Land Speculation and Vacant Land to avoid Poverty
The urbanisation level of 56.25% in South Africa has recorded the world highest level in 2001. The “Apartheid City was a political economy of space which was based on two policies, i.e. racially-based spatial planning and development for some at the expense of others”. Cities were purposely designed to push poor black citizens to the margins of the city. Thus, the black population were materially distanced from advantages normally associated with city life”.
With the abolition of Apartheid in 1994, the new government made a commitment to redress these imbalances and inequality and to create cities that are more equal, inclusionary, productive and sustainable. Although 1.6 million houses have been provided since 1994, they have tended to enforce traditional apartheid planning where the poor are still located on the periphery, far removed from employment and economic opportunities. This has resulted in increased urban sprawl and de-densification. Furthermore, the subsidy on public transport was more than double that spent on housing subsidy but the house prices has increased by an average of 20% per year. Land prices also increased sharply. Land speculation has been highlighted as one factor accounting for the significant increase in land prices. * Tax Penalty for Land Speculation
Property taxation can take different forms. There is the flat rate system which is a tax on the value of the land and buildings. The other form is land value taxation and composite rating. However, flat rate system has