The notion of Human Capital Accumulation as a basis for reform of select employment related tax incentives in Kenya and South Africa

Mwaja, Christine Mukami

The notion of Human Capital Accumulation as a basis for reform of select employment related tax incentives in Kenya and South Africa

Master Thesis

2020

Abstract

Human capital signifies the idea that skills and capabilities embodied in human beings constitute a form of capital. The collection of human skills and capabilities i.e. human capital, in a country, represents the human capital accumulation in that economy. This human capital accumulation is achieved through a process of instilling, building up and developing skills and capabilities. This dissertation considers use of tax incentives to contribute to human capital accumulation in Kenya and South Africa. Currently, there are some indirect tax incentives in both countries which give favourable treatment to some employee related expenses. There also exists, in both Kenya and South Africa, a direct employer tax incentive aimed at encouraging employment of graduates and specific job seekers. In both countries, however, there is no broad direct tax incentive that benefits all employers who contribute to developing various other forms of human capital. The dissertation therefore looks at considerations and reforms which are necessary to establish a desirable tax incentive for employers in Kenya and South Africa that contributes to human capital accumulation. Some of the considerations which the dissertation looks at include; why employers should be given the incentive, why the incentive should be direct, whether the existing tax incentives meet the goal of human capital accumulation and the relevance of human capital accumulation to Kenya and South Africa. The dissertation also suggests some reforms that should be made in developing a desirable direct tax incentive for employers. The suggested reforms are based on deficiencies identified from an evaluation of the like direct employment incentive schemes offered by Kenya and South Africa to employers to encourage employment of graduates and specific job seekers.

Keywords

Commercial Law

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