Simulating personal income tax in South Africa using administrative data and survey data. A comparison of PITMOD and SAMOD for tax year 2018

• Working paper
• Jul 2021
• Barnes Helen , Gasior Katrin , McLennan David , Muwanga-Zake Eva , Ngobeni Winile , Noble Michael , Sithole Alexius , Steyn Wynnona , Wright Gemma
• WIDER Working Paper 2021/120 - 2021/120

Abstract

In this paper we explore South Africa’s personal income tax system using two microsimulation models. The first, SAMOD, simulates personal income tax and social benefits
using a dataset derived from the nationally representative National Income Dynamics Study survey. The second, PITMOD, simulates the personal income tax system and is underpinned by a dataset comprising a full extract of anonymized individual-level administrative tax data especially constructed for this purpose. The two models have a common framework in the form of the EUROMOD microsimulation software and interface, and have a common policy timepoint of 1 March 2017. Discrepancies between the simulated personal income tax generated by each model are explored in order to better understand the strengths and weaknesses of the two models.