Parliament agrees to the 2021 Fiscal Framework and Revenue Proposals

During their recent separate plenary sessions, the National Assembly (NA) and the National Council of Provinces (NCOP) agreed to the Finance Committees Reports on the 2021 Fiscal Framework and Revenue Proposals.

The Fiscal Framework and Revenue Proposals is a framework for a specific financial year that gives effect to the national executive’s macroeconomic policy. It includes, among other things, estimates of all revenue, budgetary and extra-budgetary specified separately, expected to be raised during that financial year and estimates of borrowing for that financial year.

The framework was tabled by the Finance Minister Mr Tito Mboweni on 24 February 2021 together with the 2021/2022 Budget, the Division of Revenue Bill and the Appropriations Bill.

Parliament’s Standing Committee on Finance recommended approval of the Fiscal Framework and Revenue Proposals to the NA and the Select Committee on Finance recommended approval to the NCOP. Agreement to the framework and proposals follows meetings between the finance committees, the Minister of Finance and senior officials from National Treasury. The committees also received input from the Parliamentary Budget Office and the Financial and Fiscal Commission.

Public hearings were held and the committees received written submissions from stakeholders, such as the Congress of South African Trade Unions, the Budget Justice Coalition, the Fiscal Cliff Study Group, the South African Institute of Chartered Accountants, the South African Institute of Tax Professionals, PricewaterhouseCoopers, the University of Cape Town’s Research Unit on the Economics of Excisable Products, the Organisation Undoing Tax Abuse, Amandla.mobi, 1Road Consulting, National Council Against Smoking and the Healthy Living Alliance.

One of the recommendations made by stakeholders is that to improve efficiency of spending, government should focus on reducing its size to find the needed funds whilst enhancing the quality of service delivery and its performance. Several stakeholders also welcomed the withdrawal of R40 billion increase in taxes over the medium term and the adjustment of tax brackets for inflation.

Parliament’s Select and Standing Committee on Finance also made a number of observations and recommendations, while acknowledging that the 2021 Budget was tabled under extremely difficult economic conditions, exacerbated by the impact of the Covid-19 pandemic.

One of the recommendations made was that the National Treasury and South African Revenue Service should intensify revenue enhancement initiatives to collect maximum revenue due to government in order to enable it to deliver on its constitutional obligations.

The committees remained concerned that despite government’s efforts to support job creation, the rate of unemployment reached record levels in the last quarter of 2020, making it extremely difficult for the economy to absorb new entrants into the labour market, particularly the youth.