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Business Conference

About the FFC

"For an Equitable Sharing of National Revenue within a Sustainable Fiscal System"

The Financial and Fiscal Commission is an independent, objective, impartial and unbiased constitutional advisory institution. It is a permanent expert Commission with a constitutionally defined structure, set of generic responsibilities and institutional processes. The Commission has the responsibility to advise and make recommendations to Parliament, provincial legislatures, organised local government and other organs of State on financial and fiscal matters. And its primary role is to ensure the creation and maintenance of an effective, equitable and sustainable system of intergovernmental fiscal relations in South Africa.

Conversation Between Colleagues


South Africa is a unitary state with three levels of government - local, provincial and national. Each of these tiers of government is assigned certain powers, functions and financial resources. Each function may be exclusive, concurrent or shared.

The three tiers of government are superimposed on an existing tax (and public expenditure) regime, which is characterised by severe vertical and horizontal fiscal imbalances. In other words, while national government raises the vast bulk of aggregate revenues, its expenditure responsibilities are much lower. There is thus a mismatch between revenues raised and expenditure responsibilities. The converse mismatch exists at provincial level. Provinces only raise a small proportion of the revenues to meet their expenditure responsibilities. This vertical mismatch is known as vertical fiscal imbalance. Horizontal fiscal imbalance exists amongst provinces, and also amongst localities within provinces. There are massive relative differences amongst provinces' expenditure responsibilities, and existing (also potential) revenue sources.

A country characterised by these features, and with a sensitive political history, is dependent on a fiscal system which provides for intergovernmental fiscal transfers. It is essential that the relative sizes of fiscal resources which have to flow between and amongst governments and tiers are determined equitably and in a transparent manner.

A system of intergovernmental fiscal relations (with an emphasis on fiscal flows) however has the potential for political manipulation, unless it is based on equity, which in turn is based on sensible, reasonable, objective and quantifiable criteria. In addition, it is highly desirable to have an impartial and independent institution to ensure that the system developed and implemented contains the above mentioned characteristics. Thus was the inauguration of the Financial and Fiscal Commission.

Code of Ethics

The Commission subscribes to the values of good governance, accountable public administration and sound financial and human resources management as reflected in the Constitution and other laws and regulations applicable to public administration within South Africa;

Operates in accordance with the right to freedom of expression contemplated in Section 16 of the Constitution which includes the freedom to receive or impart information or ideas; academic freedom and the freedom of scientific research;

Acts as a consultative body for, and makes recommendations and gives advice to, organs of State in the National, Provincial and Local spheres of Government on financial and fiscal matters; and

Is accountable to Parliament for its good governance and for the discharge of its mandate

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