This Selected Economic Issues paper examines economic developments in South Africa during 1993–94. After a cumulative fall of 3.5 percent between 1989 and 1992, GDP at market prices grew by 1.1 percent in 1993. The major contribution to growth came from the turnaround in the inventory cycle, with positive investment in inventories recorded for the first time since 1989. Private consumption expenditure remained subdued in 1993, rising by only 0.5 percent; by contrast, public consumption grew by 1.8 percent in 1993.

Abstract

This Selected Economic Issues paper examines economic developments in South Africa during 1993–94. After a cumulative fall of 3.5 percent between 1989 and 1992, GDP at market prices grew by 1.1 percent in 1993. The major contribution to growth came from the turnaround in the inventory cycle, with positive investment in inventories recorded for the first time since 1989. Private consumption expenditure remained subdued in 1993, rising by only 0.5 percent; by contrast, public consumption grew by 1.8 percent in 1993.

II. Saving in South Africa

1. Introduction

It is widely acknowledged that a sustained increase in South Africa’s economic growth will require an increase in the level of investment. However, given recent saving trends, the means to fund higher investment are much less clear. Relative to the 1960s and 1970s, personal saving has fallen, offset in part by an increase in corporate saving; the government sector has switched from being a net saver to a net dissaver; and, since the mid-1980s, the external sector has consistently recorded a net capital outflow. In these circumstances, understanding the factors that lie behind movements in the level of saving in South Africa, and thereby the potential to fund an increase in the level of investment, has become an important policy issue.

This chapter focuses on the trends and determinants of external and private saving in South Africa. In Section 2, trends in national saving and its components over the last three decades are discussed. In Section 3, the relationship between national saving, external saving, and investment in South Africa is explored. During the 1960s and 1970s, foreign saving played a significant role in funding investment. In contrast, after the imposition of sanctions in 1985, South Africa recorded a relatively steady level of external outflows. Whether, in the post-apartheid era, external saving will again be an important means of funding investment will depend on how conducive policies are to providing an adequate rate of return.

Section 4 outlines likely explanations for the decline in the level of personal saving in South Africa in the 1980s, focusing on the decline in per capita real income, declining income inequality, and an easing of liquidity constraints associated with financial deregulation. The simultaneous sharp increase in contractual saving has been at the expense of discretionary saving and can in part be explained by the considerable tax advantages available for contractual forms of saving. These tax arrangements do not appear to have increased total personal saving.

In Section 5, the trends and determinants of corporate saving are discussed. The tax system is shown to have generally encouraged an increase in corporate saving rather than the distribution of corporate income as dividends. A final section draws together the chapter’s conclusions.

2. Saving trends between 1960 and 1993

Although the aggregate ratio of national saving to GNP in South Africa has until recently been fairly stable, the components of national saving have been volatile. Table 4 shows the ratio of various saving aggregates to GNP between 1960 and 1993. During the 1960s, 1970s, and 1980s, gross national saving in South Africa generally fluctuated between 22 percent and 26 percent of GNP: the exception was the period of the gold price boom--gross national saving reached 36 percent of GNP in 1980 (Chart 8).

Table 4.

South Africa: Saving Ratios, 1960-93

(In percent of GNP)

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Sources: South African Reserve Bank, Quarterly Bulletin, September 1994; supplementary data provided by the authorities.
CHART 8
CHART 8

SOUTH AFRICA GROSS AND NET NATIONAL SAVING, 1960–93

(In percent of GNP)

Citation: IMF Staff Country Reports 1995, 021; 10.5089/9781451840919.002.A002

Source: South African Reserve Bank, Quarterly Bulletin.

From 1990, gross national saving declined sharply, and in 1992--at 17 percent of GNP--gross national saving reached its lowest level for the whole period.

Personal saving averaged 8½ percent of GNP during the period 1960 to 1980 (Chart 9), and then declined sharply to an average of 5½ percent in the 1980s. The secular decline in gross personal saving was offset by an upward trend in corporate saving. Between 1960 and 1975, gross corporate saving averaged around 10 percent of GNP (Chart 9); it jumped to over 20 percent in 1980 during the gold price boom, and even after falling back, averaged 16 percent of GNP over 1984 to 1993.

Until the mid-1970s, gross general government saving averaged 6½ percent of GDP, or one fourth of national saving (Chart 9). After 1975, general government saving decreased and, since 1992, the government sector has been dissaving around 4 percent of GNP. The operational saving position of the Government--which abstracts from the inflation component of government interest payments--has shown a similar trend.1/

Finally, depreciation, measured at replacement cost, was around 11 percent of GNP between 1960 and 1975 (Chart 9). It rose rapidly thereafter, reaching a maximum of 18 percent in 1986. This increase has been attributed to the rising average capital intensity of South Africa’s production techniques (due in part to investment undertaken from the mid-1970s by public corporations and to the increasing capital intensity of the gold mining industry), and to the real depreciation of the rand which increased the replacement cost of capital, most of which is imported (Jacobs, 1992). From 1987 onward, depreciation as a share of GNP fellback--to 15 percent in 1993--in line with the real appreciation of the rand between 1988 and 1992.

CHART 9
CHART 9

SOUTH AFRICA SAVING AND DEPRECIATION, 1960–93

(In percent of GNP)

Citation: IMF Staff Country Reports 1995, 021; 10.5089/9781451840919.002.A002

Source: South African Reserve Bank, Quarterly Bulletin.

3. Relationship between national saving and investment

The extent to which total investment can deviate from national saving depends on the availability of foreign saving, defined as the negative of the current account balance. 1/ While in a closed economy investment must be fully financed from domestic sources, in an open economy movements in national saving can be largely independent of movements in investment, provided external saving is available to cover the difference.

Table 5 and Chart 10 show South Africa’s gross national saving, gross investment, and external saving as a share of GNP between 1960 and 1993. Between 1960 and the early 1980s, national saving and investment were not strongly correlated. During that period, imbalances between national saving and investment were reflected in what were often large and volatile changes in external saving. Indeed, the level of investment exceeded national saving in most of the period 1960 to 1985, with the gap financed by external inflows.

Table 5.

South Africa: Saving and Investment Ratios, 1960–93

(In percent of GNP)

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Source: South African Reserve Bank, Quarterly Bulletin, September 1994.

Including inventories.

Gross investment of public authorities and corporations.

CHART 10
CHART 10

SOUTH AFRICA NATIONAL SAVING, INVESTMENT, AND EXTERNAL INFLOW, 1960–93

(In percent of GNP)

Citation: IMF Staff Country Reports 1995, 021; 10.5089/9781451840919.002.A002

Source: South African Reserve Bank, Quarterly Bulletin.

After 1985, when financial sanctions were imposed on South Africa, the external sector consistently recorded a net outflow. Since that time, there has been a close positive relationship between movements in national saving and in investment, particularly after 1987 when the level of external outflow stabilized at around 1½ percent of GNP. 2/ As one consequence of this development, the recent decline in national saving in South Africa has been accompanied by a simultaneous decline in investment, which fell from 26 percent of GNP in 1984 to just 16 percent by 1992, a level barely sufficient to cover total depreciation.

These observations can be supported through regression analysis. In particular, the following equation was estimated: 3/

Δ(IY)(t)=α+βΔ(SY)(t)+ϵ(t)

where (I/Y) is the ratio of gross investment to GNP and (S/Y) the ratio of gross national saving to GNP using annual data in the periods 1961 to 1985, and 1986 to 1993. 1/ A beta-coefficient that is not significantly different from unity indicates that changes in the national saving and investment ratios during the period are highly correlated, which may suggest that external saving is not sufficiently flexible to enable a wide deviation in the level of national saving from that of investment, while a coefficient that is close to zero may suggest the opposite conclusion. 2/ The results are as follows (standard errors are shown under the coefficients):

Period1961-85:Δ(Iy)=-0.06(0.67)+0.14(0.21)Δ(Sy)R2-adj:0.00DW:2.02F-stat:0.44Correctioncoefficient:0.13Period1986-93:Δ(Iy)=0.57(0.48)+1.19(0.31)Δ(Sy)R2-adj:0.66DW:2.23F-stat:14.69Correctioncoefficient:0.85

For the period 1961 to 1985, the coefficient on the saving ratio was insignificantly different from zero and significantly different from one, while for the period 1986 to 1993, the coefficient on the saving ratio was significantly different from zero and insignificantly different from one. 3/

These results indicate that during the period 1960 to 1985, external saving played an important role in funding investment in South Africa. In particular, in the face of changes in the level of national saving, external saving responded in a manner that enabled South Africa to maintain its investment path. In contrast, between 1986 and 1993, the results suggest that the steady level of external outflow constrained changes in investment to equal changes in national saving. The recent ending of apartheid offers an opportunity for external capital flows to return to the role they played for the quarter century before 1986, when external saving was a source of financing investment in South Africa. Whether external saving will respond in such a manner will depend on whether new investment possibilities are expected to earn a sufficient rate of return, which underscores the importance of a relative price structure and corresponding level of competitiveness that are conducive to an investment-led expansion of output.

4. Issues concerning personal saving

The saving trends presented in Section 2 indicated that personal saving as a share of GNP in South Africa decreased sharply in the 1980s relative to its level during the 1960s and 1970s. At the same time, individuals appear to have increased their share of contractual compared to other forms of saving. 1/ 2/ In particular, contractual saving increased from around 5 percent of GNP in 1970 to a high of 15 percent in 1991 (Table 6) and Chart 11). 3/ Discretionary saving has shown the opposite trend, declining from around positive 5 percent of GNP in 1971 to negative 10 percent in 1991--as the net flow of credit to the personal sector exceeded the net increase in their deposits--before rising to negative 5 percent in 1993.

Table 6.

South Africa: Personal Saving Ratios, 1970–93

(In percent of GNP)

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Source: South African Reserve Bank, Quarterly Bulletin, September 1994.

Calculated as current receipts minus current expenditure of contractual savings institution.

CHART 11
CHART 11

SOUTH AFRICA COMPONENTS OF GROSS PERSONAL SAVING, 1970–93

(In percent of GNP)

Citation: IMF Staff Country Reports 1995, 021; 10.5089/9781451840919.002.A002

Source: South African Reserve Bank, Quarterly Bulletin.

There are several likely factors to explain the decline in the overall level of total personal savings in South Africa in the 1980s. First, with the almost 20 percent decline in per capita income and subsequent increase in unemployment over the decade, under the permanent income hypothesis, the level of personal saving would be expected to decrease if individuals perceived that the level of actual income had fallen relative to permanent income. 1/ Second, income inequalities have slowly been reduced, and household income for the poorest groups has been supplemented by increases in the value and take up rate of the social pension during the 1980s. 2/ Third, liquidity constraints that had been binding were eased from the early 1980s (van der Walt and Prinsloo, 1993). 3/

Turning to the composition of personal saving, the growth of contractual saving at the expense of other forms of saving seems to have been mainly a function of the favorable after-tax returns available for contractual forms of saving. The after-tax return from bank deposits for an individual paying the highest marginal tax rate fell from negative 6½ percent in the 1970s to negative 7½ percent in the 1980s, before increasing somewhat to negative 5½ percent in the early 1990s (Table 7), periods during which capital controls prevented residents from investing abroad. In contrast, the after-tax return from contractual forms of saving has been considerably higher since, while not uniform, each offers three tax advantages over discretionary forms of saving (summarized in Table 8). First, contractual saving institutions can continually reinvest their income--all of which is tax-free--until the accumulated earnings are withdrawn, which enables them to earn a return on income that would otherwise have been taxed away had it accrued directly to individuals. Second, employer and often employee contributions are not taxed at the time of payment (subject to a maximum) and lump-sum pension payments are also not taxed (subject to a maximum); that portion of the contributions made to contractual funds which is paid out in lump-sum form is therefore never subject to tax. Third, for the balance of the benefit received, there can be a substantial difference between the tax rate that would have been paid at the time the contribution was made and the tax rate paid when a pension is received, since the tax code provides for a favorable tax-free threshold for pensioners (e.g., the threshold for a married pensioner without dependents was R 24,881 in 1993/94 compared with R 12,501 for a married person under the age of 64 without dependents). 1/

Table 7.

Rate of Return on Contractual Saving, Bank Lending, and Deposit Rates, 1970-93 1/

(In percent)

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Sources: South African Reserve Bank, Quarterly Bulletin, September 1994; and staff calculations.

Rate of return calculated as gross investment income divided by total assets (valued at market prices) at end-December of previous year.

Calculated as nominal rate times 1 minus the top marginal personal income tax rate, including surcharges.

Table 8.

South Africa: Taxation of Contractual Saving Institutions, 1992

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Source: Assembled from data within the Mouton Report (1992).

Highest of R 1,750 per annum or 7 ½% of pensionable income.

Highest of R 1,750, R 3,500 less pension contributions, or 15% of nonpensionable income.

Depends on highest maximum salary and number of years of contributions.

To illustrate the attractiveness of contractual saving, Table 9 compares contributing R 100 directly to a contractual institution in 1980 and withdrawing the benefit in 1990, with receiving R 100 as income in 1980 and depositing the after-tax balance in a bank deposit (i.e., depositing R 45, since the highest marginal income tax rate in 1980 was 55 percent). 2/ In this example, the after-tax nominal rate of return on bank deposits would have been negative 1 percent compared with a return of positive 12 percent and 11 percent for pension funds and long-term insurers, which indicates the substantial incentive for agents to have undertaken contractual saving during this period.

Table 9.

South Africa: Illustrative Example of the Relative Return from Bank Deposits and from Contractural Saving 1/

(In rands)

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Source: Staff calculations.

Interest return used to calculate the after-tax annual interest from bank deposits and the return from contributions to contractual funds are shown in Table 7.

Further, agents will be willing to contribute the maximum amount to contractual institutions that qualifies for favorable tax treatment and, if necessary, to borrow from banks and other institutions to maintain their level of consumption--regardless of developments in the level of total personal saving--provided the expected return from contractual saving is greater than the expected cost of borrowing. Although lending rates, such as the mortgage rate, have typically been higher than the nominal return on contractual saving (see Table 7), the tax-free status of contributions to contractual saving institutions has provided an incentive to undertake this form of saving, even if financed by discretionary dissaving (see again example in Table 9). 3/ The removal of interest and credit controls in the early 1980s increased the possibility for agents to intermediate between contractual and discretionary saving. The data suggest that in recent years--as a result of financial innovation--intermediation has occurred primarily through the use of housing assets: 1/ in effect, households have reshuffled their wealth portfolios, decreasing their wealth held in one form of asset (equity in housing) in order to reap the considerable returns available from holding wealth in another form of asset (saving in contractual funds).

Nonetheless, the increase in contractual saving has been insufficient to arrest the decline in overall personal saving since the early 1980s, and the favorable tax arrangements available for contractual saving do not appear to have had a net saving-creating effect. Several commentators have, therefore, discussed whether policies should be changed to discourage the growth of contractual saving in South Africa, as they have been in several other countries (cf. Kahn, 1992, and Vittas, 1994). Possible reforms include the elimination of tax preferences for contractual saving, the imposition of a tax on investment income and/or personal assets over a specified limit, or the capping of eligible pensionable income (as in most industrial countries). The Mouton Report generally argued against substantial changes to the existing approach noting that many countries have relied on tax concessions to build a viable private retirement system, there by decreasing the possible future cost of the aged to the State. The Mouton Report did, however, argue for an equalization of tax arrangements between different types of contractual funds.

5. Determinants of corporate saving

After-tax corporate profits can either be distributed as dividends, with potential increases in recorded personal saving, or retained as corporate saving. As noted previously, the ratio of gross corporate saving (including that of public enterprises) increased from around 10 percent of GNP in 1965 to 15 percent in 1993. Meanwhile, corporate dividend payments to the noncorporate sector declined from 8 percent of GNP in 1965 to around 2 percent from 1977 onwards (Chart 12).

CHART 12
CHART 12

SOUTH AFRICA CORPORATE SAVING, DIVIDENDS, AND ROYALTIES, 1960–93

(In percent of GNP)

Citation: IMF Staff Country Reports 1995, 021; 10.5089/9781451840919.002.A002

Source: South African Reserve Bank, Quarterly Bulletin.

Since private corporations are ultimately owned by the household sector (often by way of the pension funds), total corporate saving can be considered a form of personal saving. Indeed, if households regard an increase in corporate saving as a store of household wealth inequity and a perfect substitute for other forms of saving, then an increase in private corporate saving should prompt a commensurate fall in personal saving.

The tax regime can exert an important in fluence on the decision for agents to earn in come with in a corporation. Between 1960 and 1984, the top marginal individual income tax rate exceeded the company tax rate, with the difference ranging from between 4 percent and 31 percent (Table 10): this differential provided a substantial incentive for agents to earn income with in a corporation rather than as an individual. Since 1984, however, this incentive has been reduced since the personal income tax rate has generally been equal to or below the corporate income tax rate; it was only in the March 1993 Budget that the corporate tax rate was cut so that it was again below the top individual rate.

Table 10.

South Africa: Relationship Between Corporate and Personal Income Taxes, 1960-95

(In percent)

article image
Sources: Margo Report (1986); Budget statements; and staff calculations.

Including surcharge.

Between 1960-89, calculated as two-thirds of the personal income tax rate including surcharge. Since 1991, dividends are exempt from personal income tax. However, from 1993, companies were subject to a tax on distributed dividends net of the tax paid (the Secondary Tax on Companies or STC).

Further, tax arrangements can also affect whether income that is earned within a corporation is distributed or retained as corporate saving. South Africa’s dividend tax rate has varied substantially over time. Between 1960 and 1990, one third of dividends received by individuals were tax free, with the balance taxed at the individual marginal rate; between 1990 and 1993, all dividends received by individuals were tax free; and more recently dividends have been subject to the Secondary Tax on Companies (STC), set at 15 percent of the net of tax dividend in the fiscal year 1993/94 and raised to 25 percent for 1994/95. Table 10 shows that with these arrangements the effective tax paid on dividends as a percentage of post-tax income to an individual subject to the highest marginal tax rate varied between 30 percent and 44 percent between 1960 to 1989. Hence, since capital gains on equities are effectively tax free, a substantially lower rate of overall tax was paid when corporate profits were retained rather than distributed to households, which is consistent with the decline in the level of dividend payments paid to the noncorporate sector since 1965.1/

Table 10 also indicates that while the STC has reintroduced the tax on dividends, the rate still remains below the pre-1990 level. Nevertheless, the STC provides an incentive to decrease dividend payments even further to individual investors in favor of an increase in corporate saving. The effect of the STC is yet to be seen, but to the extent that it causes more profits to be retained in companies, it may not assist efforts to “unbundle” enterprises in South Africa.

6. Conclusions

The most important point made in this chapter is that national saving and investment moved independently of each other between 1960 and 1985. This suggests that, with appropriate macroeconomic fundamentals, foreign saving may once again play a substantive role in funding investment in the South Africa. In particular, if the rate of return to investment is sufficiently attractive, external saving by way of foreign direct investment or foreign borrowing by domestic agents may be able to fund a higher level of investment even without a significant pick up in national saving. This underscores the need for South Africa to work toward a relative price structure and level of competitiveness that are conducive to external capital flows.

Several other conclusions emerge from this study. First, the sharp decline in personal saving in the 1980s in part appears to have been related to the deviation in current to trend income. As the economy recovers, so too might the ratio of personal saving to GDP, and there by the level of national saving. Second, the rapid increase in contractual saving in the 1980s appears to have largely been at the expense of discretionary saving rather than being additional to total personal saving. The after-tax rate of return of contractual saving has been substantial relative to both the return from discretionary forms of saving and to the cost of borrowing. Households appear to have substituted between contractual and discretionary forms of saving--following the relaxation of credit and interest rate controls from the early 1980s. Third, tax incentives to retain corporate profits have been quite substantial, which is consistent with the sharp decline in net dividend distributions from the corporate sector since 1965.

References

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  • Vittas, D.,Policy Issues in Contractual Savings in South Africa,mimeo, World Bank, June 1994.

1/

Private saving is typically measured as the difference between the estimate of gross national saving and general government saving. This biases upward recorded private saving since government interest payments compensate in part for inflation and are effectively an amortization of government debt (Blejer and Chu, 1988). To account for this effect, the operational saving position adds to recorded government saving the inflation component of government interest payments, and corresponding adjustments could be made to private saving. In the specific case of South Africa, the inflation component of government interest payments--calculated as the inflation rate times the stock of government debt--has increased only gradually, from around 3 percent of GNP in 1973 to around 5 percent in 1993. Since the consequent trend over time in recorded government saving and the operational saving position are similar, this issue is not addressed further.

1/

Following the Standard System of National Accounts (SNA), the focus here is on national, rather than domestic, saving.

2/

In South Africa, the recorded level of national saving has probably been biased downwards due to capital flight undertaken through misinvoicing, especially since 1985. Misinvoicing reduces the recorded size of the current account surplus. When private saving is measured as the residual between investment on the one hand and government saving less foreign outflow on the other, the effect of misinvoicing has been to underrecord the level of private saving.

3/

Feldstein and Horioka (1980) used a similar approach to test for capital mobility in 0ECD countries during the period 1960 to 1974. They concluded that movements in external saving were not sufficient to allow investment to be independent of national saving. Subsequent work indicated this relationship weakened after 1980 as, inter alia, the pace of financial liberalization intensified (Frankel, 1991; Feldstein and Bacchetta, 1991).

1/

The variables are expressed in first differences to increase the likelihood that they are stationary.

2/

An alternative interpretation is that the government adjusts its own saving to target the level of the current account. See Bayoumi (1990).

3/

The results for the equation between 1986 and 1993 should be regarded with caution due to the short sample period.

1/

Contractual saving is defined, as in the Mouton Report (1992), as the net current income of private and public pension and provident funds and of long-term insurers. This is not strictly correct since the net current income of long-term insurers includes income from life insurance; however, the data do not permit a division between net current income from the life insurance business and that from other forms of business undertaken by long-term insurers. Typically, two thirds of the business of life insurers represents contributions for pension funds and for retirement annuity plans. Mortgage and hire-purchase payments are classified under discretionary saving. Data for contractual saving are available from 1970.

2/

There are two types of contractual saving funds in South Africa: provident funds, which pay a lump sum benefit on retirement; and pension funds (private or public) and retirement annuity plans, which paypart of their benefits in a lump sum and the balance via periodic payments. In South Africa, one third of total private pension and retirement annuity benefits may be commuted into a lump-sum benefit; under the Income Tax Act, there is no restriction on public pension benefits that can be commuted into a lump-sum benefit. Members of provident funds are generally employees covered by industry agreements and in certain State enterprises (e.g., Telkom, Transnet), while members of retirement annuity plans are generally the self-employed and employees wishing to supplement their pensions. Total membership in contractual saving funds has grown rapidly, from 2 million in 1970 to almost 6.5 million members in 1992 (Mouton Report, 1992).

3/

Since 1990, the Government has made a series of special contributions to offset the underfunding of the official pension funds. In addition, it has significantly increased its payroll contribution rate.

1/

This result was supported by background statistical work.

2/

If, as seems likely, marginal propensities to consume are higher for relatively poorer groups, and/or if there is an income threshold below which saving is zero, then a redistribution of income toward relatively poorer groups will decrease the aggregate quantity of saving (Gersovitz, 1988). The sparse data on the distribution of income in South Africa suggest that, since 1960, per capita income has increased for the poorest groups at a rate faster than that for more wealthy groups, with the Gini coefficient declining from 0.630 in 1961-72, to 0.615 in 1973-78, 0.600 in 1979-84, and 0.595 in 1985-91 (data provided by the Central Economic Advisory Service, Pretoria).

3/

In particular, before the early 1980s, there were several restrictions on the overall growth of credit to households: (i) selective direct quantitative credit controls were imposed on banks between 1967 and 1972 and between 1976 and 1980; (ii) deposit rates were controlled between 1965 and 1980 (which had the effect of channelling funds outside the banking system); and (iii) maximum statutory lending rates were imposed until 1983.

1/

Since pensionable salaries are not subject to a cap for tax deductibility purposes, this tax deferral mechanism is of most value to high-income earners.

2/

For simplicity, it is assumed that one third of the total pension benefit in 1990 was taken as a tax-free lump sum, and the balance was paid as an annual pension. The estimates assume that the individual faces the highest marginal rate in 1980 and is 65 years of age in 1990. As is readily apparent from the table, by 1990, the after-tax value of the contractual saving (between R 275 and R 325 for pension funds depending on the size of the pension and hence the average tax rate, and between R 235 and R 275 for long-term insurers) would have been substantially higher than the bank deposit (R 90).

3/

In particular, an agent that chose in 1980 to invest R 100 in a contractual institution would have had to borrow only R 45 to maintain the same level of consumption, since if this income had not been contributed to a contractual institution R 55 would have been taxed away in 1980. Assuming for convenience that no mortgage principal or interest was paid until 1990, the level of repayment due in 1990 (around R 220) would have been substantially less than the 1990 value of the pension fund investment.

1/

Mortgage loans averaged 3½ percent of GNP between 1980 to 1991, and increased to 7 percent in 1992 and 1993.

1/

These results mirror the findings in Chapter V that the marginal effective tax rate is lowest if investment is financed from retentions rather than through new share issues.

South Africa: Selected Economic Issues
Author: International Monetary Fund
  • View in gallery

    SOUTH AFRICA GROSS AND NET NATIONAL SAVING, 1960–93

    (In percent of GNP)

  • View in gallery

    SOUTH AFRICA SAVING AND DEPRECIATION, 1960–93

    (In percent of GNP)

  • View in gallery

    SOUTH AFRICA NATIONAL SAVING, INVESTMENT, AND EXTERNAL INFLOW, 1960–93

    (In percent of GNP)

  • View in gallery

    SOUTH AFRICA COMPONENTS OF GROSS PERSONAL SAVING, 1970–93

    (In percent of GNP)

  • View in gallery

    SOUTH AFRICA CORPORATE SAVING, DIVIDENDS, AND ROYALTIES, 1960–93

    (In percent of GNP)