Agricultural land tax and farm-level resource use and output supply response

This study develops and uses a programming model for farm-level resource use and output supply response to estimate the effects of agricultural land tax in South Africa: A case study of Free State, a region of extremely large commercial farms that gained their size and economic heft during the apartheid years of aggressive subsidies, favorable tax treatment, lucrative state grants and gifts, and all manner of financial assistance. The results indicate that changes in land use and output supply are marginal. The highest effects are observed on irrigated farming. Relevant policy responses raised by the findings are discussed.