The Benefit Theory of Taxation and Its Implications on the South African Indigent Households

Abstract

Public finance and taxes handle the concept of the benefits principle. This is done by levying public goods taxes based on willingness to pay. This makes the cost of these advantages equal. This idea is often related to the pricing of personal items. According to Plata and Pascual (2022), Escarraz in 1967, Knut Wicksell in 1896, and Erik Lindahl in 1919 invented the benefits technique to evaluate fiscal policies and taxation. Paul Samuelson, Richard Musgrave, and others refined this method. It has also been used for tax progressiveness, corporate taxes, and property/wealth taxation. This paper examines how the benefit theory may help impoverished South Africans pay for government services in a democratic environment. This research claims South Africa struggles to pay for state-provided services. South Africa's democratic transformation is related to the issue of service expectations against the benefits that emanate from that. The benefit theory of taxes and its principles underpin the text theoretically and epistemologically. However, a literature survey provides its premise, argument, crux, purpose, results, and conclusions. Thus, the article gathers multiple academics' views on the benefit principle technique from connected papers, journals, and books. The research states that poor individuals cannot afford government services. However, governmental services are not really for those who can pay. The study also states that the government is experiencing several public protests owing to poor service delivery. Since most of the country is underprivileged and rural, this research suggests that the benefit theory will only apply to a limited number of people.