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Municipal tariff reforms get serious pushback
Public participation platform DearSouthAfrica.co.za has launched a campaign encouraging South Africans across the country to have a say on increases proposed by their local municipality. To date, Over 46,000 angry residents have voiced their concerns.
Property rates, electricity, water, sanitation, and refuse removal are just some of the services that will see an increase in fees. Some municipalities have introduced new services that carry additional fees. What this means is that some residents will end up paying 20-30% more for municipal services, severe enough to force some to sell their properties.
However, it seems the City of Cape Town is buckling under popular pressure, after noisy protests against its proposed tariff reforms which include fixed charges for water and sanitation, as well as a city-wide cleaning tariff based on property values.
Residents have suddenly become activists and a petition has been launched to block the City’s proposed new tariff system.
Cape Town has big ambitions, with plans to spend nearly R40 billion in the next year to maintain its status as a world class city. It has become a victim of its own success. Those who bought properties 10 or 20 years ago may have seen massive increases in their property values due to foreign and local buying – but their incomes have not kept pace. Now they are forced to face the reality of what it means to live in a city with property values shooting up much faster than other parts of the country.
The City uses Computer-Assisted Mass Appraisal (CAMA) software, which compares property sales data across about 885,018 rateable properties, of which 719,681 are residential, and extrapolates this to come up with average market values.
This leaves plenty scope for mistakes.
For example, low-to-middle income areas like Grassy Park could find properties being overvalued due to CAMA’s reliance on area averages, meaning residents end up paying substantially more for services.
For retirees in areas where properties are valued at R2 million or more could find themselves hit with a 57% increase in water and a 100% increase in sanitation services.
Fixed charges for water, sanitation, and cleaning – based on property values – will generate additional revenue, with 100% increases in some categories. These reforms aim to diversify income beyond rates, reducing reliance on market fluctuations.
If you live in Cape Town, you can view your property value here: available at www.capetown.gov.za/propertyvaluations
If you disagree with your property valuation, you have 60 days to lodge grounds for the objection, along with documentation – such as comparable sales data to show your property is overvalued.
Alongside Dear South Africa’s call for public participation, a petition organised by the City of Cape Town Collective Ratepayers’ Association (CTCRA), which represents more than 45 residents’ and ratepayers’ organisations, has so far collected more than 12,000 signatures.
The petition argues that the proposed changes violate the Municipal Systems Act, prejudices those who draw power from solar and direct from Eskom, while forcing those in central improvement districts (CIDs) to pay twice for cleaning services.
Another complaint is that fixing tariffs for water, sanitation and cleaning services to property values is unlawful and violate the Municipal Systems Act’s obligation to charge equitable, usage-based fees.
The South African Property Owners Association (Sapoa) weighed in with objections of its own, arguing that the new cleaning tariff is nothing but a new tax, which the City is prohibited from levying under the Municipal Fiscal Powers and Functions Act.
The City has countered what it considers misinformation regarding the likely increase in electricity tariffs – arguing the increase is as low as 3% for a R3 million home using 750 units of electricity.
It is nevertheless considering softening the tariff impact by expanding rates exemptions of R450,000 for homes beyond the current R5 million value threshold. It also proposes raising the pensioner rebate beyond the current R22,000 a month income limit. Another proposed concession is to reduce cleaning charges for properties valued between R2.5 million and R7.5 million.
Cape Town is clearly pulling away from the rest of the country in terms of services and quality of life, and that comes at a cost. It plans to spend R39.7 billion in infrastructure over the next year, to maintain its image as the “city of hope”.
Mayor Geordin Hill-Lewis points out that even with the new tariffs, Cape Town homeowners in the R2.5 million bracket are still R700 better off each month than a Joburg resident with the same property value.
Have your say on increases proposed by your municipality on the public participation platform here right away.