UNIVERSITY OF SOUTH AFRICA (UNISA)
College of Economic and Management Sciences
⋄
ASSIGNMENT 02
Semester 2, 2026
⋄
Module Code: ECS4866
Module Name: Advanced Public Economics
Assignment No.: 02
Due Date: 28 August 2026
Semester: Semester 2, 2026
Unique Number: 594502
Submitted in partial fulfilment of the requirements for Advanced Public Economics (APE3701)
at the University of South Africa.
, UNISA | ECS4866 Advanced Public Economics — Assignment 02
Question 1: Mistakes and Half-Truths in Tax Policy Statements
The evaluation of tax instruments requires that they be judged against recognised criteria: al-
locative efficiency, equity (both horizontal and vertical), administrative feasibility, and revenue
adequacy (Musgrave and Musgrave, 1989). The two statements below each contain a mixture
of truth and significant error when measured against these criteria.
1(a) A Poll Tax Will Promote Efficiency, Equity, and Universal Tax Coverage
There is a kernel of truth here, but the statement is ultimately misleading. A poll tax, also
called a head tax, is indeed theoretically efficient in the narrow allocative sense. Because it
is a fixed, lump-sum charge on every individual regardless of income, consumption, or be-
haviour, it creates no substitution effect and imposes no deadweight loss (Stiglitz, 2000:471).
On that score alone, the efficiency claim holds.
The equity claim, however, is plainly wrong. A poll tax is regressive by its very nature. When
a fixed amount is collected from every person, the tax burden as a proportion of income falls
far more heavily on the poor than on the wealthy. In a country like South Africa, where the
Gini coefficient remains among the highest in the world and where poverty is widespread,
such a tax would worsen income distribution rather than improve it (National Treasury, 2022).
It violates the principle of vertical equity, which holds that individuals with higher incomes
should bear a proportionally greater burden (Rosen and Gayer, 2014:342).
The claim about universal coverage is also overstated. Large segments of the South African
population survive on social grants or informal earnings below any realistic taxable threshold.
Collecting a poll tax from these individuals would require an administrative apparatus that
the South African Revenue Service (SARS) would struggle to deploy cost-effectively, and
enforcement against the very poor is both logistically and politically impractical.
Quality Assurance
A tax that is allocatively efficient is not automatically equitable. The two criteria fre-
quently pull in opposite directions, and no single instrument can satisfy all evaluation
criteria simultaneously (Musgrave and Musgrave, 1989:212). In South Africa’s context,
the equity failure of a poll tax is so severe that it would be politically untenable, as
the United Kingdom discovered when the Community Charge (a form of poll tax) was
repealed in 1991 following widespread public resistance.
Page 1 of 14
College of Economic and Management Sciences
⋄
ASSIGNMENT 02
Semester 2, 2026
⋄
Module Code: ECS4866
Module Name: Advanced Public Economics
Assignment No.: 02
Due Date: 28 August 2026
Semester: Semester 2, 2026
Unique Number: 594502
Submitted in partial fulfilment of the requirements for Advanced Public Economics (APE3701)
at the University of South Africa.
, UNISA | ECS4866 Advanced Public Economics — Assignment 02
Question 1: Mistakes and Half-Truths in Tax Policy Statements
The evaluation of tax instruments requires that they be judged against recognised criteria: al-
locative efficiency, equity (both horizontal and vertical), administrative feasibility, and revenue
adequacy (Musgrave and Musgrave, 1989). The two statements below each contain a mixture
of truth and significant error when measured against these criteria.
1(a) A Poll Tax Will Promote Efficiency, Equity, and Universal Tax Coverage
There is a kernel of truth here, but the statement is ultimately misleading. A poll tax, also
called a head tax, is indeed theoretically efficient in the narrow allocative sense. Because it
is a fixed, lump-sum charge on every individual regardless of income, consumption, or be-
haviour, it creates no substitution effect and imposes no deadweight loss (Stiglitz, 2000:471).
On that score alone, the efficiency claim holds.
The equity claim, however, is plainly wrong. A poll tax is regressive by its very nature. When
a fixed amount is collected from every person, the tax burden as a proportion of income falls
far more heavily on the poor than on the wealthy. In a country like South Africa, where the
Gini coefficient remains among the highest in the world and where poverty is widespread,
such a tax would worsen income distribution rather than improve it (National Treasury, 2022).
It violates the principle of vertical equity, which holds that individuals with higher incomes
should bear a proportionally greater burden (Rosen and Gayer, 2014:342).
The claim about universal coverage is also overstated. Large segments of the South African
population survive on social grants or informal earnings below any realistic taxable threshold.
Collecting a poll tax from these individuals would require an administrative apparatus that
the South African Revenue Service (SARS) would struggle to deploy cost-effectively, and
enforcement against the very poor is both logistically and politically impractical.
Quality Assurance
A tax that is allocatively efficient is not automatically equitable. The two criteria fre-
quently pull in opposite directions, and no single instrument can satisfy all evaluation
criteria simultaneously (Musgrave and Musgrave, 1989:212). In South Africa’s context,
the equity failure of a poll tax is so severe that it would be politically untenable, as
the United Kingdom discovered when the Community Charge (a form of poll tax) was
repealed in 1991 following widespread public resistance.
Page 1 of 14
