The Woolman and Bishop study on African Constitutional Law is admirable for both the amplitude of its scope and the degree of the analysis into which it gets. One whole chapter, written by Kriel and Mnadjem is precisely on Public Finance. The paucity of provisions, it is remarked, on public finance in the South African Final Constitution is what allows for a mature body of legislation and policy to evolve. This very space, however, as all constitutionalists will recognize, can very well be troublesome and testy. The premise of the South African fiscal structure is that it is the national government that primarily collects revenue. What is collected by the Provinces is supplemental to what the national government raises. The Final Constitution clearly limits the revenue-raising powers of the Provinces while keeping silent about the powers of the national government, leaving no doubt that as between the national and the Provincial government, it is the former that enjoys plenary revenue-raising powers. Very interestingly, the powers of the Provinces to levy taxes and to tap other sources of income is severely constricted, while the power given municipalities is rather generous. Instructive for us too is that rather than burdening the text of the Final Constitution with the details of expenditure, these are appended to the charter in “Schedules”—that have reaped a fair share of criticism.
There is noted the paradoxical—if immensely difficult—situation that while provinces are responsible for the delivery of services that are capital-intensive—health care, schooling, housing and roads—only grudgingly and sparingly are the means given the sub-national units by which to cater to these essential needs. One salutary feature however of the Final Constitution is that it keeps functional allocation from being static: responsibility from one sphere of government can move, usually downwards, to the municipalities (that are statutorily equipped with revenue-raising instruments).
One of the toughest challenges within the South African constitutional system is what is known as “vertical fiscal imbalance” that results from the strange—but not totally unheard of—scheme of centralized taxation and decentralized service delivery. The national government collects much of the revenue, but the Provinces are directed to deliver many of the services. “The greatest fiscal imbalance is in the provincial sphere: Provinces raise only a fraction of the revenues that they are required to expend.” Earlier, in answer to a question posed to me by a television anchor person, I had said that two institutions play crucial roles in the fiscal operations: the Supreme Court that, under the draft, rules on the boundaries of power and competence of the federal government and the federated regions, and the Federal Intergovernmental Commission that, in the words of one of the Con-Com members, Art Aguilar, is the lubricant that allows for the smooth operation of the machinery of the entire body politic in a federal republic. While the specter of transfers of revenue from the national government to the federated regions has struck fear in the hearts even of policy-makers, in the South African constitutional scheme, that seems to be not only expected but prescribed after all, the national government collects and the Provinces deliver the services. Of course if one continues to think of the national government as the prime delivery channel of services, then a serious problem certainly arises. Payment of the national debt is also a concern of South Africa as it is here, as the furor following my remarks asking for clarity in executive policy amply exhibit. In the South African system, national interests prevail, among these the payment of national debts and honoring sovereign guarantees.
The structural tension is obvious: the Final Constitution makes the allocation of revenue a matter of political judgment—passed by an Act of Parliament, very much like our GAA is. And being the political branch that is is, allegiances, loyalties and affiliations make their way into the picture. On the other hand there is a layer (a veneer?) of objective criteria for distribution—such as the services the Provinces are expected to make available and the performance of their constitutionally allocated functions. It is a compromise between the extreme positions of making the central government responsible both for raising the money and for spending it (which would be the death of any pretense at federalism), and giving free rein to Provinces to levy and to spend, that would clearly weaken the position— and the influence—of the national government but is not completely unheard of in robust federal states.
While the debate among political scientists and constitutionalists rages whether to classify Spain as federal or not, the fact is that its treatment in its constitutional law of its Comunidades Autonomas should be instructive for us. Luis Pomed Sanchez, writing in the authoritative treatise “Comentarios a la Constitucion Española” calls attention to a fundamental feature of the Spanish Constitution in regard to Autonomous Communities: From the time they are constituted and their Statutes of Autonomy approved, the Communities enjoy all the competence described as “ordenacion del territorio, urbanism y vivienda,” and Sanchez hastens to remark that all Autonomous Communities have made use of this broad grant of autonomy. Instructively, the Spaniards have seen fit to write into their constitution the items within the competence of the Autonomous Communities: railroads and highways, transportation, ports and airports, agriculture, natural resources, environmental protection, aquatic resources and internal waters, tourism, hygiene and sanitation. Obviously, this goes into “distribution of powers” of which the Con-Com Draft has a separate article, but the economic and fiscal consequences of this distribution need not be belabored.
The power of the Autonomous Communities to tax is expressly recognized in the Spanish Constitution, subject to the fundamental proposition that it is the Spanish government as such that enjoys the principal power to tax. The contrast between “strong federal systems” such as Canada and the United States makes itself felt here where the taxing power of the sub-national entity may be characterized as “derived” or “limited.” Despite the unmistakable inclination of the jurisprudence of the Constitutional Court to recognize in the central government the power to tax, there is always the realization that safeguarding the Autonomous Community’s power to tax is a juridical guarantee of autonomy. “Procura asi la Constitucion integrar las exigencias diversas en este campo, de la reserva de Ley estatal y de la autonomia territorial, autonomia que posee tambien una proyeccion en el terreno tributario.” Important then is the fact that Autonomous Communities exact taxes not only at the sufferance of the Central Government but as a power inherent to their autonomy and, as such, constitutionally guaranteed. Interestingly, the Constitutional Court has adopted, in respect to this fiscal matter, a hermeneutic principle: None of the constitutional limits that condition the financial power of the Autonomous Communities should be so interpreted as to make them non-viable.”
Although not written into the text of the Spanish Constitution, the Constitutional Court has held that the “unity of the economic order” of Spain is a fundamental principle of the Spaish constitutional order. But there is an abundance of literature that will include the name of Eduardo Garcia de Enteria, among others, and, not too surprisingly, “un grupo de profesores catalanes” in a Report on Autonomy (1988) pointing precisely to the Autonomous Communities of Spain as the actualization of what is commonly called “cooperative federalism.” That the Constitution and legislative acts set certain minimum standards for the economic activity of the Autonomous Communities, quite clearly, does not negate autonomy, although it could conceivably be the case that these Communities were left to conduct their commercial and economic activities without free of any boundaries established by the Constitution or national statute, which would then approximate the Swiss cantonal system. In Spanish constitutional law then, Juan Antonio Ureña Salcedo points out, the development of the different sectors that constitute the economy as a whole is a joint responsibility of the State and of the Autonomous Communities.
That is the kind of proposition that one advances when one shirks from the convoluted turns that negotiations, debates and diverging positions on distribution of competences can take—as well as the extent that autonomy really gets qualified until it ceases to be genuine autonomy. It is the same thing with federalism: How much of the authority and control of the central government do you retain, before you have so diluted “federal” that it loses its meaning? That is not some idle semantic dispute, as the current debate in the Philippines clearly demonstrates.