Filling the fiscal basket : quantifying tax revenues from customer loyalty programmes
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Date
Authors
Croucamp, Ilanri Francie
Craigen, Jade Shirley
Pidduck, Teresa Michelle
Swanepoel, Sumarie
Coetzee, Elizabeth Susanna Maria
Journal Title
Journal ISSN
Volume Title
Publisher
NISC Pty (Ltd) and Informa Limited (trading as Taylor & Francis Group)
Abstract
The South African government is experiencing a significant shortfall in tax revenue, and recent research has identified customer loyalty programmes (CLPs) as a potential revenue stream. Despite the popularity of these programmes, which are used by 73% of economically active South Africans, no tax is currently imposed on the rewards received by customers, resulting in the loss of much-needed tax revenue. This paper quantifies the tax revenue that could have been generated by South Africa’s three most-used CLPs over a five-year period (2018–2022) to determine if a tax on CLP rewards is a viable revenue stream for the fiscus. The longitudinal instrumental case study employed demonstrates that the fiscus could have conservatively collected R1 140 753 042 in total tax revenue from the three CLPs if a tax had been imposed on CLP rewards, as proposed in this paper. This paper highlights the significant revenue potential of taxing CLP rewards, and it provides valuable insights for policymakers who seek to address the country’s revenue challenges. The findings reveal the magnitude of potential contributions to tax revenue in the form of CLPs. Given the impetus behind CLPs, their exponential growth rate and their increasing importance as a marketing strategy, this paper proposes a re-evaluation by policymakers of the taxation of CLP rewards.
Description
Some of the sections of this work are based on the mini dissertations of the first two authors. "Quantifying tax revenue in the retail sector : a story of customer loyalty programmes in South Africa", Croucamp, Ilanri Francie. (Mini Dissertation (MCom (Taxation))--University of Pretoria, 2022.) URI: http://hdl.handle.net/2263/92958. "A treatment for the fiscal deficit : taxation of customer loyalty programmes in the retail pharmaceutical industry", Craigen, Jade Shirley. (Mini Dissertation (MCom (Taxation))--University of Pretoria, 2022.) URI: http://hdl.handle.net/2263/92190.
Keywords
Customer loyalty programmes, Revenue recognition, Withholding tax, Loyalty rewards
Sustainable Development Goals
None
Citation
Ilanri Croucamp, Jade Craigen, Teresa Pidduck, Sumarie Swanepoel & Elizabeth Coetzee (2024): Filling the fiscal basket: Quantifying tax revenues from customer loyalty programmes, South African Journal of Accounting Research, vol. 38, no. 3, pp. 247-263, DOI: 10.1080/10291954.2024.2322783.