Cape Town RSC Levy Firm Panel Data 2000-2006

Until 2006 metropolitan and district councils in South Africa, which were previously called Regional Services Councils (RSC), were permitted to raise revenue by taxing firms that operated within the council area. The City of Cape Town taxed firms based on their turnover and wage bill but also used the administration of the RSC levy, as the tax was called, to create an administrative dataset of firms. The city used this data to calculate Gross Geographic product and produce a number of reports on the local economy (cf City of Cape Town 2001).
The City undertook a survey of all firms on the RSC tax database in 2000 and linked the firms to location based GIS data. The RSC data is thus a mixture of administrative and survey data. The dataset covers the period 2000 to 2006.
In theory any enterprise employing at least 1 worker or with a revenue of R10 000 a year was supposed to pay the RSC levy and thus be included in the database. Thus this dataset should be a census of all formal firms operating with the city of Cape Town during the period covered, except the very smallest self-employed operators. In practice, however those familiar with the RSC have said that there was evasion of the tax, with a possible 30% of firms evading.

Around two thirds of the active firms in 2000 responded to this survey. Some of this survey data (particularly employment) was supposed to be updated every year but in practice we only have useable survey data for the first year of the panel. Much of the employment data was imputed in subsequent years and cannot be used. New entrants were captured in the database but some of the survey information is not available for these firms.

The project to create this research dataset was made possible by an exploratory grant obtained by Andrew Kerr and Martin Wittenberg of DataFirst from the Private Enterprise Development in Low-Income Countries (PEDL) research initiative. PEDL is a joint research initiative of the Centre for Economic Policy Research (CEPR) and the UK Department For International Development (DFID). It aims to develop a research programme focusing on private-sector development in low-income countries.