With the Minister of Finance having delivered the Budget Speech last week and various political parties indicating that they will not support the budget, the question that has to be asked is “What happens next?” If the budget isn’t approved, will the government shut down? Will the VAT increase be implemented? Can we get a redo?
Let’s start at the beginning. The budget itself is not a single piece of legislation but a series of different bills with different purposes. When the Minister introduced his speech to the National Assembly, he listed many of these bills. They include the Fiscal Framework, the Division of Revenue Bill, Appropriations Bill, Revenue Laws Amendment Bill and various others. In this article I will only focus on a few of them, but for the reader, it’s worth just calling them the “Money Bills.”
Now before one gets to the business of deliberating and approving the various Money Bills, the National Assembly will first approve the Fiscal Framework. Imagine this as the umbrella under which all the other bills fall. This framework provides the breakdown on government spending, and shows where money is going to go, along with how government is going to raise revenue through its various taxation schemes such as income tax, corporate taxes, valued-added tax and many more.
For the first time in the country’s history, the African National Congress (ANC) does not have a majority in the National Assembly, or in the committees that feed back into the National Assembly. For years, the ANC has merely brought legislation through committees, they have rubber-stamped it and it has gone on to the National Assembly to be approved. But no more.
This week, two committees of Parliament will begin meeting to deliberate over two key pieces of legislation that underpin the budget. The Standing Committee on Finance will be examining the Fiscal Framework, and the Standing Committee on Appropriations will be deliberating over the Division of Revenue Bill.
Six votes
On the Standing Committee on Finance there are 11 members of parliament: 4 ANC, 2 Democratic Alliance (DA), 2 uMkhonto weSizwe (MK), 1 Economic Freedom Fighter (EFF), 1 ActionSA (ASA) and 1 Inkatha Freedom Party (IFP). The IFP has indicated that it supports the budget, so currently with the ANC that makes up five votes on the committee. The remaining parties have indicated they don’t support the budget: that’s six votes.
Now what exactly is the committee going to do? It is the members’ responsibility to review the Fiscal Framework and then submit a report to the National Assembly (NA) which will either support, amend or reject the Framework. Effectively the committee is reviewing what the finance minister has provided and then submitting a report to Parliament on its findings with relevant recommendations.
It gets a bit more interesting. From the day the finance minister delivers the budget speech, two different legislated deadlines kick in. The first is that the Fiscal Framework must be presented at the National Assembly within 16 days or what is reasonably possible, and the second is that the Division of Revenue Bill must also be presented at the National Assembly within 35 days or what is reasonably possible. Something tells me that the interpretation of the term “reasonably possible” is going to be very important in the coming weeks. Now, if the Standing Committee on Finance rejects or amends the Fiscal Framework, it must be sent back to the finance minister to comment on before it goes to the National Assembly.
So, what are the current timelines? The National Assembly is set to vote on the Fiscal Framework on Wednesday 2 April, exactly two weeks after the delivery of the budget speech. The Division of Revenue Amendment Bill is set for Thursday 24 April.
Underpin the budget
There is now real politics at play. The ANC does not have the numbers on the parliamentary committees to ensure that a report which supports the various pieces of legislation and money bills that underpin the budget is submitted to the National Assembly. It is possible that the ANC could convince members of the minority parties on the parliamentary committees to support them, but this would only solve one of their problems. This is because there is no path towards approving the legislation in the National Assembly without the support of either the DA, MK or EFF.
But wait, there’s more. Once the Minister has delivered the budget speech and indicated that Value Added Tax is going to increase by 0.5%, this is automatically implemented as of 1 May, without any legislative approvals in place. Crazily enough, the VAT Act allows this implementation to take effect before the actual Amendment Bill has been through the National Assembly and been approved. There is a 12-month period during which this can be done.
Currently, there is no provision on the parliamentary programme for the VAT Amendment Act to be addressed in Parliament before 1 May.
If there is no agreement on the VAT increases in the month of April, the ANC would need to urgently bring this bill to Parliament and have the declaration made by the minister revoked.
Legal obligation
The risk in not doing this, is that the VAT increases are implemented from 1 May and then the VAT bill is taken to the National Assembly later in the year and is voted down. In which case the government has a legal obligation to refund those affected by the VAT increase, which would be everyone in the country.
For the first time in the country’s history, the finance parliamentary committees will play a decisive role in the fiscal policy of the country and all eyes will be on the members of parliament that serve on these committees. They are in a unique position to represent the views of the citizens of the country in helping to shape the budgetary process.
[Image: Kelly Sikkema on Unsplash]
The views of the writer are not necessarily the views of the Daily Friend or the IRR.
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