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South Africa's Financial And Fiscal Commission Issues Recommendations For Next Year's Budget

by Robert Lee, Tax-news.com, London

19 June 2001


The Financial and Fiscal Commission (FFC), an advisory body to the South African government, has submitted its proposals for the split between total available revenue in the 2002/03 Budget for the regions on national, provincial and local governmental levels.

In its proposal, the FFC states that the current 'equitable share of the Budget' formula 'does not adequately address the obligation on all three spheres (of government) to provide constitutionally mandated basic services.'

Murphy Morobe, chairman of the FFC, said that the commission was in agreement that a tax base for the provinces should be awarded. Currently, the Constitution only recognises the national government's right to raise income tax, corporate tax and customs and excise duties, while municipalities could only levy municipal and property rates. But Mr Morobe suggested that legislation could be implemented allowing for a provincial tax base of some kind such as imposing a surcharge on personal income tax, fuel and gaming activities.

As a statutory institution, the FFC is a permanent expert commission with a constitutionally defined structure, set of generic responsibilities and institutional processes, dealing with intergovernmental fiscal relations in South Africa. South Africa's Constitution obliges the commission to submit its recommendations to the government via Parliament for possible consideration in the next Budget.

Although the government does not always agree to the FFC's recommendations, Mr Morobe said he was fairly satisfied that they were being seriously considered. 'We have got to a point now where our collaboration, particularly with the Treasury, could not be better, and it can only improve. We have gone a long way to defining how our respective roles need to be carried out,' he said.

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