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 the 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 most converse mismatch exists at the provincial level.
Provinces only raise a small proportion of the revenues to meet their
