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| Division of Revenue Act | |
|---|---|
| Name | Division of Revenue Act |
| Enacted by | Parliament of South Africa |
| Status | Active |
| Long title | An Act to provide for the equitable division of revenue between the national, provincial and local spheres of government |
Division of Revenue Act The Division of Revenue Act is annual South African legislation enacted by the Parliament of South Africa to allocate distributable revenue among the National Treasury (South Africa), provincial governments, and municipalities of South Africa. The Act translates fiscal frameworks set by the Minister of Finance (South Africa), the Budget of South Africa, and the Medium Term Budget Policy Statement into binding transfers governed alongside the Constitution of South Africa, the Intergovernmental Fiscal Relations Act, and frameworks used by the South African Reserve Bank.
Origins trace to post-apartheid fiscal reforms led by the Government of National Unity (South Africa), the Constitutional Court of South Africa decisions on fiscal separation, and policy work within the National Treasury (South Africa), the Department of Cooperative Governance and Traditional Affairs, and the African National Congress. The Act interacts with the Public Finance Management Act, the Division of Revenue Amendment Bill, and reports from the Standing Committee on Appropriations, reflecting priorities articulated in the Medium Term Strategic Framework and the National Development Plan. International comparators and influences include practices from the United Kingdom, Canada, Germany, Australia, and the European Union on fiscal federalism, alongside guidance from the International Monetary Fund and the World Bank.
The Act establishes schedules and annexures defining allocations to provincial equitable shares, conditional grants, and municipal equitable shares, referencing instruments administered by the National Treasury (South Africa), the Treasury of the Western Cape, and provincial treasuries like the Gauteng Provincial Treasury. It specifies baseline ceilings, conditional grant frameworks such as the Infrastructure Grant to Provinces, the Municipal Infrastructure Grant, and sector-specific allocations tied to departments including the Department of Health (South Africa), the Department of Education (South Africa), and the Department of Transport (South Africa). The legislative structure aligns with appropriation acts passed by the National Assembly of South Africa and oversight by the Auditor-General of South Africa.
Equitable share formulas incorporate indicators drawn from the Statistics South Africa censuses, demographic profiles used by the South African Local Government Association, and poverty measures referenced in reports by the Human Sciences Research Council. The Act uses division formulas considering parameters from the Municipal Demarcation Board, service delivery needs assessed with the Department of Water and Sanitation, and infrastructure backlogs identified in the National Infrastructure Plan. Conditional grants are disbursed via performance frameworks similar to those evaluated by the Development Bank of Southern Africa, the Independent Development Trust, and monitored against targets in the Presidency of South Africa planning documents.
Administration is led by the National Treasury (South Africa), in coordination with provincial treasuries such as the Eastern Cape Provincial Treasury and municipal finance offices like the City of Johannesburg Metropolitan Municipality finance department. Transfers follow procedures in the Public Finance Management Act, with compliance scrutiny from the Auditor-General of South Africa and parliamentary oversight by the Portfolio Committee on Finance (South Africa), Standing Committee on Public Accounts, and Select Committee on Finance. Implementation engages stakeholders including the South African Local Government Association, Civil Society Organisations like the Treatment Action Campaign, and research inputs from universities such as the University of Cape Town and the University of the Witwatersrand.
Judicial review has arisen in cases brought before the Constitutional Court of South Africa, the Supreme Court of Appeal (South Africa), and provincial high courts concerning procedural compliance, equitable share calculations, and conditional grant conditions. Litigants have included provincial governments, municipalities like the City of Tshwane, and interest groups represented in courts alongside amici from institutions such as the South African Human Rights Commission. Decisions have referenced constitutional provisions on fiscal allocations and precedent from cases adjudicated by judges appointed through processes involving the Judicial Service Commission (South Africa).
Analysts from institutions like the Human Sciences Research Council, the South African Institute of Race Relations, and the Congress of South African Trade Unions have critiqued the Act for perceived imbalances affecting provinces such as the Northern Cape and municipalities in the Eastern Cape. Critics point to challenges documented in reports by the Special Investigating Unit, the Public Protector (South Africa), and investigative coverage in media outlets including the Mail & Guardian and the Sunday Times (South Africa). Supporters cite improved fiscal predictability referenced in National Treasury (South Africa) publications, alignment with National Development Plan targets, and inputs from development financiers like the African Development Bank.
The Act has been amended through annual iterations and consequential changes arising from the Division of Revenue Amendment Act processes, budget votes in the National Assembly of South Africa, and reforms influenced by reports from the Financial and Fiscal Commission (South Africa. Subsequent legislation interacting with the Act includes updates to the Public Finance Management Act, the Intergovernmental Fiscal Relations Act, and sector-specific statutes affecting transfers to the Department of Health (South Africa), the Department of Basic Education (South Africa), and municipalities governed under the Municipal Structures Act.
Category:South African legislation