Capturing the Tax-Revenue Bracketing System via a predator-prey model: Evidence from South Africa

Abstract

Revenues obtained from the corporate tax heads play significant roles in any economy as they can be prioritized for producing public goods and employment creations, among others. As such, corporate tax revenue should be paid enough attention. This study, therefore, explores the tax-revenue harvesting system of an economy where we focused on the corporate tax head. The system comprises three players; the government and formal and informal firms. We applied the predator-prey model to model the effect of the government-gazetted tax rate on corporate survivability. It is a new approach to modeling economic system relations and games. Critical combinatory points are derived, with stability analysis provided after that. Dynamics associated with the tax-revenue system are established and critically analyzed. Lastly, we provide the mathematical way the system can be optimized for the government to harvest as much Revenue as possible, including optimal conditions.