Source document: https://docs-lawep.s3.us-east-2.amazonaws.com/1698929603248.pdf (South Africa)
REPUBLIC OF SOUTH AFRICA DIVISION OF REVENUE AMENDMENT BILL (As introduced in the National Assembly (proposed section 76); explanatory summary of Bill published in Government Gazette No.

42785 of 22 October 2019) (The English text is the offıcial text of the Bill) (MINISTER OF FINANCE) [B 15—2019] No.
of copies printed .........................................500 ISBN 978-1-4850-0615-2 BILL To amend the Division of Revenue Act, 2019, in accordance with the Money Bills and Related Matters Act, 2009; and to provide for matters connected therewith.
PREAMBLE WHEREAS section 214(1) of the Constitution of the Republic of South Africa, 1996, requires an Act of Parliament to provide for— (a) (b) (c) the equitable division of revenue raised nationally among the national, provincial and local spheres of government; the determination of each province’s equitable share of the provincial share of that revenue; and any other allocations to provinces, local government or municipalities from the national government’s share of that revenue, and any conditions on which those allocations may be made; WHEREAS the Division of Revenue Act, 2019 (Act No.
16 of 2019), gives effect to section 214(1) of the Constitution in respect of the 2019/20 ﬁnancial year; AND WHEREAS section 12(4) of the Money Bills and Related Matters Act, 2009 (Act No.
9 of 2009), requires the Minister of Finance to table a Division of Revenue Amendment Bill with a revised ﬁscal framework if the adjustments budget effects changes to the Division of Revenue Act for the relevant year, BE IT THEREFORE ENACTED by the Parliament of the Republic of South Africa, as follows:— Amendments to Schedules 1, 4, 5 and 6 to Act 16 of 2019 1.

(1) Column A of Schedule 1 to this Act is hereby substituted for Column A of Schedule 1 to the Division of Revenue Act, 2019 (Act No.
16 of 2019) (hereinafter referred to as the principal Act), setting out the equitable division of revenue raised nationally among the national, provincial and local spheres of government for the 2019/20 ﬁnancial year.

(2) Column A of Part A of Schedule 4 to this Act is hereby substituted for Column A of Part A of Schedule 4 to the principal Act, specifying allocations to provinces to supplement the funding of programmes or functions funded from provincial budgets for the 2019/20 ﬁnancial year.
(3) Part A of Schedule 5 to this Act is hereby substituted for Part A of Schedule 5 to the principal Act, specifying the speciﬁc-purpose allocations to provinces for the 2019/20 ﬁnancial year.

(4) Column A of Part B of Schedule 5 to this Act is hereby substituted for Column A of Part B of Schedule 5 to the principal Act, specifying the speciﬁc-purpose allocations to municipalities for the 2019/20 ﬁnancial year.
5 10 15 3 (5) Part A of Schedule 6 to this Act is hereby substituted for Part A of Schedule 6 to the principal Act, specifying the allocations-in-kind to provinces for designated special programmes for the 2019/20 ﬁnancial year.

(6) Column A of Part B of Schedule 6 to this Act is hereby substituted for Column A of Part B of Schedule 6 to the principal Act, specifying the allocations-in-kind to municipalities for designated special programmes for the 2019/20 ﬁnancial year.
Amendment of preamble to Act 16 of 2019 2.

The preamble to the principal Act is hereby amended by the substitution for the expression ‘‘section 7(3)’’ of the expression ‘‘section 7(1)’’.

Short title 3.

This Act is called the Division of Revenue Amendment Act, 2019.
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18 MEMORANDUM ON THE OBJECTS OF THE DIVISION OF REVENUE AMENDMENT BILL,
 2019 1.
BACKGROUND 1.1 Section 214(1) of the Constitution of the Republic of South Africa, 1996 (‘‘the Constitution’’), requires that an Act of Parliament be enacted to provide for— the equitable division of revenue raised nationally among the national, (a) provincial and local spheres of government; the determination of each province’s equitable share of the provincial share of that revenue; and any other allocations to provinces, local government or municipalities from the national government’s share of that revenue, and any conditions on which those allocations may be made.
(b) (c) 1.2 Section 12(4) of the Money Bills and Related Matters Act, 2009 (Act No.

9 of 2009), requires the Minister of Finance (‘‘the Minister’’) to table a division of revenue amendment Bill with a revised ﬁscal framework if the adjustments budget effects changes to the Division of Revenue Act, 2019 (Act No.

16 of 2019) (‘‘the DoRA’’), for the relevant ﬁnancial year.
As the adjustments budget for 2019/20 effects changes to the DoRA, it is necessary for the Division of Revenue Amendment Bill, 2019 (‘‘the Bill’’), to be tabled with the revised ﬁscal framework.

1.3 The Bill is thus introduced in compliance with the requirements of the Constitution and the Money Bills and Related Matters Act, 2009.

2.

SUMMARY OF BILL 2.1 Clause 1 of the Bill proposes amendments to Schedules 1, 4, 5 and 6 to the DoRA.
2.2 The Schedules to the Bill address the following: (a) Adjusting the equitable share among the three spheres of government for the 2019/20 ﬁnancial year; (b) changes to supplementary allocations to provinces for the 2019/20 (c) ﬁnancial year; changes to speciﬁc-purpose allocations to provinces for the 2019/20 ﬁnancial year; (d) changes to speciﬁc-purpose allocations to municipalities for the 2019/20 (e) (f) ﬁnancial year; introduction of a new grant for the 2019/20 ﬁnancial year; changes to allocations-in-kind to provinces for designated special programmes for the 2019/20 ﬁnancial year; and (g) changes to allocations-in-kind to municipalities for designated special programmes for the 2019/20 ﬁnancial year.
2.3 Clause 2 of the Bill proposes an amendment of the preamble to the DoRA by the substitution for the expression ‘‘section 7(3)’’ of the expression ‘‘section 7(1)’’ to accord with section 7 of the Money Bills and Related Matters Act, 2009.

2.4 Clause 3 of the Bill contains the short title.

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ORGANISATIONS AND INSTITUTIONS CONSULTED The following institutions were consulted on the adjustments proposed in the Bill: Financial and Fiscal Commission; South African Local Government Association; and National departments and provincial treasuries.

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FINANCIAL IMPLICATIONS TO THE STATE 19 The Bill is necessitated by the proposed national adjustment budget for the 2019/20 ﬁnancial year which affects the division of revenue between the three spheres of government.
Financial implications to government are limited to the total transfers to provinces and local government as indicated in the Schedules to the Bill.

5.

CONSTITUTIONAL IMPLICATIONS The Bill, in conjunction with the DoRA, seeks to give effect to section 214 of the Constitution.

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PARLIAMENTARY PROCEDURE 6.1 The Constitution prescribes the classiﬁcation of Bills.

Therefore a Bill must be correctly classiﬁed otherwise it will be constitutionally out of order.
6.2 The State Law Advisers and the National Treasury have considered the Bill against the provisions of the Constitution relating to the tagging of Bills, and against the functional areas listed in Schedule 4 (functional areas of concurrent national and provincial legislative competence) and Schedule 5 (functional areas of exclusive provincial legislative competence) to the Constitution.
6.3 For the purposes of tagging, the constitutional court case of Tongoane and Others v Minister for Agriculture and Land Affairs and Others CCT 100/09 [2010] Z4CC 10, conﬁrmed the ‘‘substantial measure’’ test indicated in Ex Parte President of the Republic of South Africa: In re Constitutionality of the Liquor Bill.

The test entailed that ‘‘any Bill whose provisions in substantial measure’’ fall within a speciﬁc Schedule must be classiﬁed in terms of that Schedule.
6.4 In terms of section 76(3) of the Constitution, a Bill must be dealt with in accordance with the procedure established by either subsection (1) or (2) if it falls within a functional area listed in Schedule 4 to the Constitution.
Furthermore, in terms of section 76(4)(b) of the Constitution, a Bill must be dealt with in accordance with the procedure established by section 76(1) of the Constitution, if it provides for legislation envisaged in Chapter 13 of the Constitution and includes provisions affecting the ﬁnancial interests of the provincial sphere of government.
6.5 The issue that needs to be determined is whether the proposed amendments as contained in the Bill, in substantial measure, fall within a functional area listed in Schedule 4 to the Constitution, or whether the proposed amendments fall under section 76(4)(b) of the Constitution.
6.6 The Bill seeks to amend the DoRA in accordance with section 12(4) of the Money Bills and Related Matters Act, 2009, which provides that the Minister must table a division of revenue amendment Bill with the revised ﬁscal framework if the adjustments budget effects changes to the Division of Revenue Act for the relevant year.

6.7 The Bill contains a revised ﬁscal framework with an adjustments budget that effects changes to the DoRA, for the 2019/20 ﬁnancial year.
The Bill addresses the following matters: Adjusting the equitable share among the three spheres of government for the 2019/20 ﬁnancial year; changes to supplementary allocations to provinces for the 2019/20 ﬁnan- cial year; changes to speciﬁc-purpose allocations to provinces for the 2019/20 ﬁnancial year; 20 changes to speciﬁc-purpose allocations to municipalities for the 2019/20 ﬁnancial year; introduction of a new grant for the 2019/20 ﬁnancial year; changes to allocations-in-kind to provinces for designated special pro- grammes for the 2019/20 ﬁnancial year; and changes to allocations-in-kind to municipalities for designated special programmes for the 2019/20 ﬁnancial year.
6.8 The provisions of the Bill have been carefully examined, and in our view, they amount to legislation envisaged in Chapter 13 of the Constitution.

Further- more, the Bill includes provisions affecting the ﬁnancial interests of the provincial sphere of government as contemplated in section 76(4)(b) of the Constitution.

We are therefore of the opinion that the Bill must be dealt with in accordance with the procedure prescribed by section 76(1) of the Constitution.
6.9 The State Law Advisers and the National Treasury are of the opinion that it is not necessary to refer the Bill to the National House of Traditional Leaders in terms of section 18(1)(a) of the Traditional Leadership and Governance Framework Act, 2003 (Act No.

41 of 2003), since it does not contain provisions pertaining to customary law or customs of traditional communities.

21 DIVISION OF REVENUE AMENDMENT BILL ATTACHMENTS Page 1.
Annexure 1: Explanatory Memorandum to the Division of Revenue Amendment Bill................................................................................. 2.

Annexure 2: Frameworks for Conditional Grants to Provinces ...... 22 27 3.

Annexure 3: Framework for Conditional Grants to Municipalities ................................................................................... 44 4.
Annexure 4: Infrastructure Grant Allocations to Municipalities (Schedule 5, Part B) ........................................................................... 48 5.

Annexure 5: Allocations-In-Kind to Municipalities (Schedule 6, Part B) ........................................................................... 50 6.
Appendix 1 to Schedule 6, Part A: Breakdown of National Health Insurance Indirect Grant: Allocations per Grant Component per Province .................................................................... 57 7.

Appendix 2 to Schedule 6, Part A: Breakdown of School Infrastructure Backlogs Grant: Allocations per Province .................. 59 8.

Appendix 3 to Schedule 6, Part A: Breakdown of Ilima/Letsema Indirect Grant: Allocations per Province ............................................ 61 9.
Appendix 4 to Schedule 4, Part A and Schedule 5, Part A: Breakdown of Ring-Fenced Disaster Funds: Allocations for Provinces per Grant ............................................................................. 63 ANNEXURE 1 22
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