The National Assembly (NA) and the National Council of Provinces (NCOP) approved the 2021 Fiscal Framework and Revenue Proposals during plenary sessions on Wednesday.
The Fiscal Framework and Revenue Proposals are a framework for a specific financial year, which gives effect to the national executive’s macro-economic policy. The framework includes 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 Finance Minister 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 the approval of the Fiscal Framework and Revenue Proposals to the NA, and the Select Committee on Finance recommended approval to the NCOP.
“Agreement on 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,” said Parliamentary spokesperson, Moloto Mothapo.
The public hearings were held and the committees received written submissions from different stakeholders including the Congress of South African Trade Unions, the Budget Justice Coalition, Fiscal Cliff Study Group, the South African Institute of Chartered Accountants, and the South African Institute of Tax Professionals.
Written submissions were also received from Price Waterhouse Cooper, the University of Cape Town’s Research Unit on the Economics of Excisable Products, the Organisation Undoing Tax Abuse (OUTA), Amandla.mobi, 1Road Consulting, National Council Against Smoking (NCAS), and the Healthy Living Alliance (HEALA).
Mothapo said stakeholders recommended that government should focus on reducing its size in order to improve efficiency of spending, while enhancing the quality of service delivery and its performance.
Withdrawal of R40 billion increase taxes welcomed
Several stakeholders also welcomed the withdrawal of the 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, and also acknowledged that the 2021 Budget was tabled under extremely difficult economic conditions, exacerbated by the impact of COVID-19 pandemic.
“One of the recommendations made was that National Treasury and the South African Revenue Service should intensify revenue enhancement initiatives to collect the maximum revenue due to government, in order to enable it to deliver on its constitutional obligations,” Mothapo said.
Meanwhile, the committees are concerned that despite government’s efforts to support job creation, the rate of unemployment reached a record level in the last quarter of 2020, making it extremely difficult for the economy to absorb new entrants into the labour market, particularly the youth.