REPUBLIC OF SOUTH AFRICA

LOCAL GOVERNMENT: PROPERTY RATES BILL

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(MINISTER OF PROVINCIAL AND LOCAL GOVERNMENT)

[B - 2003]

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050103se

B I L L

BE IT ENACTED by the Parliament of the Republic of South Africa as follows:—

1. Definitions

2. Power to levy rates

3. Adoption of rates policy

4. Process

5. Annual review of rates policy

6. By-laws to give effect to property rates policy

7. Rates to be levied on all rateable property

8. Differential rates

9. Levying of rates on property in sectional title schemes

10. Amount of rate

11. Period for which rates may be levied

12. Commencement of rates

13. Rates to be levied by resolution

14. Exemptions, reductions and rebates

15. Constitutional constraints

16. Impermissible differentiation

17. Limits on annual increases of rates

18. Compulsory phasing in of certain rates

19. Special rating districts

20. Register of properties

21. Property rates payable by owners

22. Payment of rates on property in sectional title schemes

23. Method and time of payment

24. Accounts to be furnished

25. Recovery of rates in arrear from tenants and occupiers

26. Absent owners

27. General valuation and preparation of valuation rolls

28. Date of valuation

29. Commencement and period of validity of valuation rolls

30. Appointment of municipal valuers

31. Functions of municipal valuers

32. Municipal partnerships

33. Qualifications of municipal valuers

34. Prescribed declaration

35. Right to inspect property

36. Conduct of valuers

37. Protection of confidential information

38. Valuation

39. General basis of valuation

40. Valuation of property in sectional title schemes

41. Contents of valuation rolls

42. Public notice of valuation rolls

43. Inspection of, and objections to, valuation rolls

44. Processing of objections

45. Adjustments to valuation rolls

46. Compulsory review of decisions of municipal valuer

47. Notification of outcome of objections and furnishing of reasons

48. Right of appeal

49. Establishment

50. Functions

51. Composition

52. Disqualifications

53. Term of office

54. Conditions of appointment

55. Conduct of members

56. Termination of membership

57. Alternates

58. Meetings

59. Administrative assistance

60. Procedures

61. Decisions

62. Decisions affecting valuation rolls

63. Orders as to costs

64. Committees of valuation appeal boards

65. Right to inspect

66. Protection of confidential information

67. Powers of valuation appeal boards

68. Proceedings by, or against, valuation appeal boards

69. Supplementary valuations

70. National monitoring and reporting

71. Regulations

72. Offences

73. Prevalence of this Act

74. Transitional arrangement: Valuation and rating under prior legislation

75. Transitional arrangement: Use of existing valuation rolls

77. Amendment of section 115 of Act 32 of 2000

78. Repeal of legislation

79. Short title and commencement

Part 1: Laws of former Province of the Cape of Good Hope

Part 2: Laws of the former Province of Natal

Part 3: Laws of the former Province of the Orange Free State

Part 4: Laws of the former Province of the Transvaal

Part 5: Other laws

1. In this Act, unless the context otherwise indicates—

"appeal board" means a valuation appeal board established in terms of section 49;

"annually" means once every financial year;

"category", in relation to property, means a category of property determined in terms of section 8;

"date of valuation" means the date determined by a municipality in terms of section 28(1);

"district management area" means a part of a district municipality which in terms of section 6 of the Municipal Structures Act has no local municipality and is governed by that municipality alone;

"district municipality" means a municipality that has municipal executive and legislative authority in an area that includes more than one municipality, and which is described in section 155 (1) of the Constitution as a category C municipality;

"effective date", in relation to a valuation roll, means the date on which the valuation roll takes effect in terms of section 29(1);

"existing rateable property" means property on which a rate was levied before 30 June 2002;

"financial year" means the period starting 1 July in a year to 30 June the next year;

"improved value", in relation to a property, means the value of property, including improvements, determined in accordance with this Act;

"improvements", in relation to a property, means any building, whether movable or immovable, and any other immovable structure in or on the property or under the surface of the property, but excludes—

"land reform beneficiary", in relation to a property, means a person who—

(a) acquired the property through—

"land tenure right", means any deed of grant, quitrent, permission to occupy or other right created by legislation or recognised by indigenous law to occupy land, but does not include full ownership;

"local community", in relation to a municipality—

(a) means that body of persons comprising—

"local municipality" means a municipality that shares municipal executive and legislative authority in its area with a district municipality within whose area it falls, and which is described in section l55 (1) of the Constitution as a category B municipality;

"MEC for local government" means the member of the Executive Council of a province responsible for local government in that province;

"metropolitan municipality" means a municipality that has exclusive executive and legislative authority in its area, and which is described in section l55 (1) of the Constitution as a category A municipality;

"Minister" means the Cabinet member responsible for local government;

"municipal council" or "council" means a municipal council referred to in section 18 of the Municipal Structures Act;

"municipality" –

"municipal manager" means a person appointed in terms of section 82 of the Municipal Structures Act;

"Municipal Structures Act" means the Local Government: Municipal Structures Act, 1998 (Act No. 117 of 1998);

"Municipal Systems Act" means the Local Government: Municipal Systems Act, 2000 (Act No. 32 of 2000);

"newly rateable property" means rateable property on which property rates were not levied before 30 June 2002;

"occupier", in relation to a property, means a person in actual occupation of property without regard to the title, if any, under which that person occupies the property;

"organ of state" means an organ of state as defined in section 239 of the Constitution;

"owner"—

provided that persons mentioned below may be regarded by a municipality as owner in the following cases:

(i) A trustee, in the case of property in a trust excluding state trust land;

(ii) an executor or administrator, in the case of property in a deceased estate;

(v) a curator in the case of property in the estate of a person under curatorship;

(vi) an usufructuary, in the case of a property that is subject to a usufruct; or

"person" includes an organ of state;

"prescribe" means prescribe by regulation in terms of section 71;

"property" means—

(a) immovable property registered in the name of a person;

(b) a right registered against immovable property in the name of a person; or

"property register" means a register of properties referred to in section 20;

"protected area" means any area declared in terms of national or provincial legislation as an area for the conservation of the biological diversity in the area or the preservation of the ecological integrity of the area;

"public service infrastructure" means—

(e) railway lines forming part of a national railway system;

(g) runways or aprons at national or provincial airports;

"rate" means a municipal rate on property envisaged in section 229(1)(a) of the Constitution;

"rateable property" means property on which a municipality may in terms of section 2 levy a rate, excluding property in respect of which rates are disallowed in terms of section 15(1);

"register"—

(a) means to record in a register in terms of—

(b) includes any other formal act in terms of any other legislation to record—

and "registered" and "unregistered" have corresponding meanings;

"Sectional Titles Act" means the Sectional Titles Act, 1986 (Act No.95 of 1986);

"sectional title scheme" means a scheme defined in section 1 of the Sectional Titles Act;

"sectional title unit" means a unit defined in section 1 of the Sectional Titles Act;

"state trust land" means land owned by the state—

(a) in trust for a tribe or another identifiable community of persons;

(b) over which land tenure rights were registered or granted; or

"this Act" includes regulations made in terms of section 71.

2. (1) A metropolitan or local municipality may levy a rate on property in its respective area.

(2) A district municipality may not levy a rate on property except on property in a district management area within the municipality.

(3) A municipality must exercise its power to levy a rate on property subject to—

(a) section 229 of the Constitution;

(b) other provisions of this Act; and

(c) the rates policy it must adopt in terms of section 3.

3. (1) A municipal council must adopt a policy consistent with this Act on the levying of rates on rateable property in a municipality.

(2) A rates policy must—

(b) determine the criteria to be applied by a municipality if it—

(f) allow a municipality to promote local, social and economic development; and

(3) Any exemptions, rebates or reductions referred to in subsection (2) and provided for in a rates policy adopted by a municipality, must comply with any national framework that may be prescribed.

4. (1) Before a municipality adopts its rates policy, a municipality must—

(b) comply with subsection (2).

(2) A municipal manager must—

(b) publish in a newspaper of general circulation in that municipality a notice—

(3) A municipal council must take all comments and submissions made to it or received by it into account when it considers the draft rates policy.

5. (1) A municipal council must annually review, and if necessary, adjust its rates policy.

(2) Sections 3 and 4, read with the necessary modifications as the context may require, apply to any adjustment of a rates policy.

6. (1) A municipality must adopt by-laws to give effect to the implementation and enforcement of its rates policy.

(2) By-laws in terms of subsection (1) may differentiate between—

(a) different categories of property; and

(b) different categories of owners liable for the payment of rates.

7. (1) If a municipality decides to levy rates, it must, subject to subsection (2), levy rates on all rateable property in its area, or in the case of a district municipality, on all rateable property in the district management area.

(2) Subsection (1) does not –

(a) oblige a municipality to levy a rate on property–

8. (1) Subject to section 16, a municipality may in terms of the criteria set out in its rates policy levy different rates for different categories of rateable property.

(2) A municipality may determine categories of rateable property for the purposes of subsection (1) according to—

(a) the use of the property;

(b) the permitted use of the property; or

(c) the geographical area in which the property is situated.

(3) Categories of rateable property that may be determined in terms of subsection (2) include the following:

(a) residential properties;

(b) industrial properties;

(c) commercial properties;

(d) farm property used for –

(e) unused farm property;

(g) small holdings used for –

(h) privately owned towns serviced by the owner;

(i) formal and non-formal settlements;

(j) tribal and other forms of communal property;

(k) state trust land;

(l) property –

(m) protected areas; or

(n) property on which national monuments are proclaimed.

9. A rate on property which is subject to a sectional title scheme, must be levied on the individual sectional title units in the scheme and not on the property as a whole.

10. (1) A rate levied on property must be–

(2) The amount of a flat rate in terms of subsection (1) (b) may not exceed the amount that would otherwise have been payable on properties in the lower end of the valuation band had the rate been levied in terms of subsection (1)(a).

11. A rate may be levied by a municipality for not more than one financial year at a time, except with the approval of the MEC for local government.

12. A rate—

(b) may not be levied retrospectively.

13. (1) A rate is levied by a municipality by resolution passed by a municipal council with a supporting vote of a majority of its members.

(2) A municipal manager must, without delay –

14. (1) A municipality may in terms of a criteria set out in its rates policy –

(2) A municipal manager must annually table in the municipal council –

(3) All exemptions, rebates and reductions granted in terms of subsection (1) must be reflected in the annual budget of a municipality–

(a) as income on the revenue side; and

(b) as expenditure on the expenditure side.

15. (1) A municipality may not exercise its power to levy rates on property in a way that would materially and unreasonably prejudice –

(a) national economic policies;

(b) economic activities across its boundaries; or

(c) the national mobility of goods, services, capital or labour.

(2) Rates that are disallowed in terms of subsection (1) include rates on—

(a) public service infrastructure;

(3) If a rate on any specific property or category of properties or a rate above a specific limit on such property or category of such properties, would materially and unreasonably prejudice any of the matters listed in paragraphs (a) to (c) of subsection (1), the Minister, acting with the concurrence of the Minister of Finance, may by notice in the Gazette –

(a) identify that property or category of properties;

(b) specify that limit, if applicable; and

(4) A notice issued in terms of subsection (3) must give the reasons why a rate on that property or category of properties, or a rate above the specified limit on that property or category of properties, would materially and unreasonably prejudice a matter listed in paragraph (a) to (c) of subsection (1).

(5) The Minister, acting with the concurrence of the Minister of Finance may, by notice in the Gazette, issue guidelines to assist municipalities in the exercise of their power to levy rates consistent with subsection (1).

16. (1) A municipality may not—

(c) levy rates which unreasonably discriminate between categories of—

(2) The ratio referred to in subsection (1)(b) may only be prescribed with the concurrence of the Minister of Finance.

17. (1) The Minister may, with the concurrence of the Minister of Finance and by notice in the Gazette, set a limit on the percentage by which a rate on property may be increased.

(2) Different limits may be set in terms of subsection (1) for –

(b) different categories of property.

(3) The Minister may on good cause exempt a municipality from a limit set in terms of subsection (1).

18. (1) A rate levied on new rateable property or on property of which the owner is a land reform beneficiary must, subject to subsection (4), be phased in over a period of three financial years, beginning from the end of the rates exclusion period specified in terms of paragraph 15(2)(g).

(2) A rate referred to in subsection (1) may –

(3) A rate levied on new rateable property or on property of which the owner is a land reform beneficiary may not be higher than the rate levied on similar property or category of property in the municipality.

(4) The MEC for local government may extend the phasing in period referred to in subsection (1) to a period which together with the initial period does not exceed six financial years.

(5) When extending a phasing in period, the MEC for local government must determine the maximum percentage of the rate payable during each financial year in the extended period.

19. (1) A municipality may –

(a) define an area within that municipality as a special rating area; and

(2) Before determining a special rating area , a municipality–

(a) must consult the local community;

(3) When a municipality determines a special rating area, that municipality must –

(a) determine the boundaries of that area ;

(b) indicate improvements to be effected in that area; and

(4) Subsection (1) does not preclude a municipality from using its resources derived from sources other than an additional rate to fund improvements anywhere in that municipality, including a special rating area.

20. (1) A municipality must draw up and maintain a register of properties situated within that municipality, consisting of a Part A and a Part B.

(2) Part A of the register consists of the valuation roll.

(3) Part B of the register must specify which properties on the valuation roll are subject to –

(a) an exemption from the rate in terms of section 14;

(b) a rebate on or a reduction in the rate in terms of section 14; and

(c) a phasing in of the rate in terms of section 18.

(4) The register must be open for inspection by the public during office hours.

(5) A municipality must review the register at least annually.

21. (1) A rate levied by a municipality on property must be paid by the owner of the property subject to Chapter 9 of the Municipal Systems Act.

(2) Joint owners of property other than property in a sectional title scheme are jointly and severally liable for the amount due for rates.

22. (1) A rate levied by a municipality on a sectional title unit, is payable by the owner of the unit.

(2) A municipality may not recover the rate, or any part of it, from the body corporate controlling a sectional title scheme.

(3) A body corporate controlling a sectional title scheme may not apportion and collect rates from the owners of the sectional title units in the scheme.

23. (1) A municipality may recover a rate–

(b) in special cases, as may be agreed with the owner of the property.

(2) (a) If a rate is payable in a single amount annually it must be paid before a day determined by that municipality.

(b) If it is payable in instalments it must be paid before a day in each period determined by that municipality.

24. (1) A municipality must furnish each person liable for the payment of a rate with a written account specifying –

(a) the amount payable;

(b) the date before which the amount is payable;

(c) the basis of calculation of the amount;

(d) the improved value of the property;

(e) particulars of any phasing in of the rate; and

(2) A person who has not received a written account in terms of subsection (1) must enquire from the municipality's office the amount due for rates and, on receipt of such information, is liable for payment of such rates.

25. (1) If an amount due for rates levied in respect of a property is unpaid after the day determined in terms of section 23(2), a municipality may recover the amount in whole or in part from a tenant of occupier of the property.

(2) The amount a municipality may recover from the tenant or occupier of the property is limited to the amount of the rent or other money due and payable by the tenant or occupier to the owner of the property.

(3) Any amount a municipality recovers from the tenant or occupier of the property may be set off by the tenant or occupier against any money owed by the tenant or occupier to the owner.

26. (1) If an owner of a property is absent, a municipality may recover the amount due for rates on the property in whole or in part from the agent of the owner or other person receiving rent for the property on behalf of the owner.

(2) A municipality may recover the amount due for rates from an agent of the owner or person receiving rent for the property on behalf of the owner, only after it has given written notice to that agent or person.

(3) The amount a municipality may recover from the agent or other person is limited to the amount of that rent received by the agent or that person after written notice has been given by that municipality to that agent or person in terms of subsection (2), less the commission due to that agent or person, subject to the Estate Agents Act, 1976 (Act No. 112 of 1976).

(4) The agent or other person must, on request by a municipality, furnish that municipality with a written statement specifying all payments for rent on the property received by that agent or person during a period determined by that municipality.

27. (1) A municipality intending to levy a rate on property must in accordance with this Act cause –

(b) a valuation roll of all those properties to be prepared.

(2) Rateable properties mentioned in section 7(2)(a) must be included in the general valuation only to the extent that a municipality intends to levy a rate on those properties.

28. (1) For the purposes of a general valuation, a municipality must fix a period that may not be more than nine months before the beginning of a financial year in which the roll is to be first implemented.

(2) The general valuation must reflect the value of properties, determined in terms of this Act, as at the date of valuation.

29. (1) A valuation roll –

(2) At the request of a municipality, the MEC for local government may extend the period for which a valuation roll remains valid to five financial years.

30. (1) A municipality, before the valuation date, must appoint a municipal valuer.

(2) A person who is not an official of a municipality may be appointed as a municipal valuer only through an open, competitive and transparent process.

(3) The MEC for local government –

(a) must monitor the appointment of municipal valuers; and

31. (1) A municipal valuer must in accordance with this Act –

(b) value such properties;

(c) submit the valuation roll to a municipality within a prescribed period;

(d) consider and decide objections to the valuation roll;

(e) attend every meeting of an appeal board when that appeal board–

(2) A municipal manager may designate one or more officials of a municipality as assistant municipal valuers to assist a municipal valuer with the performance of any of the functions set out in subsection (1).

(3) If a municipal valuer is not an official of a municipality, a municipal valuer may appoint one or more assistant municipal valuers to assist a municipal valuer with the performance of any of the functions set out in subsection (1).

(4) When appointing assistant municipal valuers, a municipal valuer is not entitled to recover from a municipality the cost of such appointments otherwise than in terms of the agreement concluded between the valuer and the municipality following an open, competitive and transparent process referred to in section 30 (2).

32. (1) A municipality may enter into an agreement with one or more other municipalities to appoint a single municipal valuer and to share the costs of preparing valuation rolls.

(2) Section 30(2) does not apply if the municipalities concerned agree to appoint an official of one of them as their municipal valuer.

33. (1) A municipal valuer—

(b) may not be a councillor of that municipality.

(2) An assistant municipal valuer—

(b) may not be a councillor of that municipality.

34. Before assuming office, a municipal valuer or assistant municipal valuer must—

(b) lodge a certified copy of such declaration with the municipal manager.

35. (1) Subject to section 14 of the Constitution which restricts or prohibits entry, a municipal valuer, assistant municipal valuer or a person authorised by the municipal valuer may, between 07:30 am and 05:00 pm, enter upon and inspect any property that must be valued for purposes of this Act.

(2) A municipal valuer or assistant municipal valuer may—

36. (1) A municipal valuer or assistant municipal valuer—

(2) A municipal valuer or assistant municipal valuer who is not an official of a municipality, must comply with the Code of Conduct as if that person is such an official.

(3) A municipal valuer or assistant municipal valuer who contravenes or fails to comply with subsection (1) is guilty of misconduct and subject to dismissal as municipal valuer or an assistant municipal valuer.

(4) A decision to dismiss a municipal valuer or assistant municipal valuer in terms of subsection (3) must be based on a finding by an enquiry conducted in terms of the Labour Relations Act, 1995 (Act No. 66 of 1995).

(5) A municipal valuer or assistant municipal valuer who is not an official of a municipality who contravenes or fails to comply with subsection (1) is guilty of misconduct, and is subject to his or her contract of employment being rescinded.

37. A municipal valuer or assistant municipal valuer may not disclose to any person any confidential information obtained in terms of this Act, and a person authorised by a municipal valuer to inspect property may not disclose to any person any information obtained during the inspection, except—

(a) within the scope of that person’s powers and duties in terms of this Act;

(b) for the purpose of carrying out the provisions of this Act;

(c) for the purpose of legal proceedings; or

(d) in terms of an order of court.

38. (1) Property must be valued in accordance with generally recognised valuation practices, methods and standards, and the provisions of this Act.

(2) For the purposes of subsection (1)—

(a) physical inspection of the property to be valued is optional; and

(b) comparative, analytical and other systems or techniques may be used, including aerial photography and computer assisted mass appraisal systems or techniques.

(3) If the available market related data of any category of rateable property is not sufficient for the proper application of subsections (1) and (2), such property may be valued in accordance with any mass valuation system or technique approved by a municipality concerned and as may be appropriate in the circumstances, including a valuation system or technique based on predetermined bands of property value and the designation of properties to one of those bands on the basis of minimal market related data.

39. (1) Subject to the provisions of this Act, the improved value of property must be the amount the property would have realised if sold on the date of valuation in the open market by a seller to a buyer.

(2) In determining the value of a property—

40. (1) When valuing a property which is subject to a sectional title scheme, the valuer must determine the value of each sectional title unit in the scheme in accordance with section 39.

(2) The value determined for each sectional title unit must include the value of—

(b) any allocation to that unit of an exclusive use area; and

(c) any other interest pertinent to the unit.

(3) In this section, a word or expression to which a meaning has been assigned in the Sectional Titles Act, has the same meaning.

41. (1) A valuation roll must list all rateable property in the municipality, subject to section 27(2).

(2) The valuation roll must reflect the following particulars in respect of each property as at the date of valuation:

(a) The registered or other description of the property;

(b) the category in which the property falls;

(c) the physical address of the property;

(d) the size of the property;

(e) the improved value of the property;

(f) the name of the owner;

(g) the postal address of the owner; and

(h) any other prescribed particulars.

42. A municipal valuer must submit the valuation roll to a municipal manager, and that municipal manager must within 21 days of receipt of the roll –

43. (1) Any person may, within the period during which the valuation roll lies open for inspection—

(a) inspect and make extracts from the roll during office hours; and

(2) An objection in terms of subsection (1) (b) must be in relation to a specific individual property and not against the valuation roll as such.

(3) A municipal manager must assist an objector to lodge an objection if that objector is unable to read or write.

(4) A municipal council may also lodge an objection with the municipal manager concerned against any matter appearing on or omitted from the roll.

(5) A municipal manager must, without delay, submit all objections to the municipal valuer who must decide and dispose of the objections in terms of section 44.

(6) The lodging of an objection does not defer liability for payment of rates beyond the date determined for payment.

44. A municipal valuer must—

(a) consider objections in accordance with a procedure that may be prescribed;

(c) adjust the valuation roll in accordance with the decisions taken.

45. (1) Any adjustments made to a valuation roll in terms of section 44(c), takes effect on the effective date.

(2) If an adjustment in the valuation of a property affects the amount of the rate payable on that property, a municipal manager must—

(a) calculate—

46. If a municipal valuer adjusts any valuation following an objection by more than 10 per cent upwards or downwards—

(a) a municipal valuer must give written reasons to a municipal manager; and

47. (1) A municipal valuer must notify, in writing, every person who has lodged an objection, and also the owner of the property concerned, if the objector is not the owner, of—

(a) the valuer's decision; and

(b) any adjustments made to the valuation roll following the decision.

(2) Within 30 days after such notification, such objector or owner may apply to that municipal valuer, in writing, for the reasons of the decision.

(3) The municipal valuer must, within 30 days after receipt of such application provide the reasons for the decision in writing, after payment of a prescribed fee.

48. (1) An appeal to an appeal board against any decision may be done in the prescribed manner where—

(a) an objector is not satisfied with a decision of a municipal valuer;

(b) an owner of a property is affected by such a decision; or

(c) the municipal council concerned is also affected by such a decision.

(2) An appeal by—

(3) An appeal lodged in terms of this section does not defer a person’s liability for payment of rates beyond the date determined for payment.

49. The MEC for local government must, by notice in the provincial Gazette, establish as many valuation appeal boards in the province as may be necessary, but not less than one in each district municipality and each metropolitan municipality.

50. The functions of the appeal board are—

(b) to review decisions of a municipal valuer submitted to it in terms of section 46.

51. (1) The appeal board consists of—

(2) The chairperson and members of the appeal board are appointed by the MEC for local government giving due consideration to the gender balance of the valuation appeal board.

(3) A person may be a member of more than one appeal board.

52. (1) The following persons are disqualified from membership of the appeal board:

(a) An unrehabilitated insolvent;

(b) a person under curatorship;

(c) a person declared to be of unsound mind by a court of the Republic; or

(2) A disqualification in terms of subsection (1) (d) ends five years after imprisonment has been completed.

(3) A member of an appeal board who is a councillor or an employee of a municipality must withdraw from the proceedings of the board if a matter concerning that municipality’s valuation roll is considered by the board.

53. The term of office of members of an appeal board is four years, but members are eligible to be re-appointed.

54. (1) The Minister must, after consultation with the MECs for local government, determine the conditions of appointment of members of the appeal board.

(2) Conditions of appointment may differ in respect of the chairperson and other members of the appeal board.

(3) The municipality or municipalities for which the appeal board was established in terms of section 49 must remunerate the members of an appeal board in accordance with their conditions of appointment and the directions of the MEC for local government.

55. (1) A member of an appeal board—

(2) A member of an appeal board who contravenes or fails to comply with subsection (1) is guilty of misconduct.

56. (1) A person ceases to be a member of an appeal board when that person—

(a) resigns;

(b) is no longer eligible to be a member; or

(c) is removed from office in terms of subsection (2).

(2) The MEC for local government may remove from office a member of an appeal board but only on the grounds of misconduct, incapacity or incompetence.

(3) A decision to remove a member of an appeal board on the grounds of misconduct or incompetence must be based on a finding to that effect by an investigating tribunal appointed by the MEC.

(4) The MEC may suspend a member of an appeal board who is under investigation in terms of subsection (3).

57. The MEC for local government may appoint alternate members of an appeal board, when a member—

(a) is absent; or

(b) has vacated office.

58. (1) The chairperson of an appeal board decides when and where the board meets, but must convene a meeting if a majority of the members of the board requests him or her, in writing, to convene a board meeting on such time and such place set out in the request.

(2) When hearing an appeal, an appeal board must sit at a place in a municipality whose valuation roll is the subject of the appeal or review.

(3) If the chairperson is absent or not available, or if there is a vacancy in the office of a chairperson, the other members of an appeal board may elect one of them to preside at the meeting or to act as chairperson.

59. (1) An appeal board may require a municipality whose valuation roll is under consideration to provide it with the necessary office accommodation and other administrative assistance, including staff for the board.

(2) A municipality whose valuation roll is under consideration is liable for the costs of an appeal board.

60. An appeal board may determine its internal procedures subject to any procedures that may be prescribed for its proceedings to dispose of appeals.

61. A question before an appeal board is decided by a supporting vote of at least a majority of the members of an appeal board.

62. (1) A municipal valuer must adjust the valuation roll in accordance with the decisions taken by an appeal board.

(2) Any adjustments made to a valuation roll in terms of subsection (1) takes effect on the effective date.

(3) If an adjustment in the valuation of a property affects the amount of the rate payable on that property, a municipal manager must—

(a) calculate—

63. When an appeal board gives its decision it may—

64. (1) The MEC for local government may authorise an appeal board to establish one or more committees to assist it in the performance of its duties.

(2) When appointing members to a committee an appeal board is not restricted to members of the appeal board.

(3) An appeal board—

(a) must determine the duties of a committee;

(b) must appoint a chairperson and other members of the committee;

(d) may remove a member of a committee from office at any time; and

(e) may determine a committee’s procedure.

(4) An appeal board which established a committee may dissolve that committee at any time.

(5) Section 54, read with the necessary changes as the context may require, applies to the conditions of appointment of committee members who are not members of an appeal board.

65. (1) Subject to the Constitution and any other law that restricts or prohibits entry, a member of, or any other person authorised by, an appeal board may, between 07:30 am and 05:00 pm, enter upon and inspect any property that is the subject of an appeal or review.

(2) A member of, or any other person authorised by, an appeal board may—

66. A member of, or any other person authorised by, an appeal board to inspect property may not disclose to any person any information obtained during the inspection except—

(a) within the scope of that person’s powers and duties in terms of this Act;

(b) for the purpose of carrying out the provisions of this Act;

(c) for the purpose of legal proceedings; or

(d) in terms of an order of court.

67. (1) An appeal board may—

(a) by notice, summon a person to appear before it –

(c) administer an oath or solemn affirmation to that person;

(d) question that person, or have that person questioned; and

(2) A person appearing before an appeal board, whether summoned or not, may at his or her own expense be assisted by a legal representative.

(3) (a) A person summoned to appear before an appeal board is entitled to witness fees paid to state witnesses in criminal proceedings in a court.

(b) Fees referred to in paragraph (a) must be paid by the relevant municipality.

(4) The law regarding privilege applicable to a witness summoned to give evidence in a criminal case in a court applies to the questioning of a person in terms of subsection (1).

68. (1) Legal proceedings by, or against an appeal board may be instituted in the name of the board.

(2) Any costs awarded in any legal proceedings against an appeal board must be borne by the municipality concerned.

69. (1) A municipality may, whenever necessary, cause a supplementary valuation to be made and a supplementary valuation roll to be prepared in respect of any rateable property—

(a) incorrectly omitted from the valuation roll;

(b) included in a municipality after the last general valuation;

(c) subdivided or consolidated after the last general valuation;

(e) substantially incorrectly valued during the last general valuation.

(2) For the purposes of subsection (1), the provisions of Part 2 of Chapter 4, Chapters 5, 6 and 7, read with the necessary changes as the context may require, are applicable except that—

(3) Supplementary valuations must be made at the date of valuation that applied to the last general valuation.

(4) A rate on rateable property for which a supplementary valuation roll was prepared takes effect from the date the supplementary roll takes effect.

70. (1) The Minister may monitor, and from time to time, investigate and issue a public report on the effectiveness, consistency, uniformity and application of municipal valuations for rates purposes.

(2) The investigation may include—

(a) studies of the ratio of valuations to sales prices; and

including the relative treatment of higher value and lower value property.

(3) Investigations may be undertaken for –

(a) individual municipalities;

(b) individual provinces; or

(c) the country as a whole.

71. (1) The Minister may make regulations not inconsistent with this Act concerning—

(a) any matter that may be prescribed in terms of this Act;

(d) the property register;

(e) the form and contents of any document referred to in this Act, including any—

(f) the procedure that must be followed in connection with—

(h) the giving of reasons by an appeal board for its decisions;

(i) the funding of appeal boards by municipalities;

(2) The Minister may by regulation in terms of subsection (1) declare a contravention of, or failure to comply with, any specific regulation an offence.

(3) Regulations in terms of subsection (1) may treat different categories of property, or different categories of property owners differently.

72. (1) A person is guilty of an offence if that person—

(a) contravenes section 36 (1)(a) or (b), 37, 55 (1)(b) or (c), or 66;

(d) after having been summoned in terms of section 67 fails—

(e) after having been called in terms of section 67 refuses—

(2) A valuer is guilty of an offence if that valuer is grossly negligent in the exercise of the functions of office set out in section 31.

(3) A person convicted of an offence in terms of subsection (1) or (2) is liable to imprisonment not exceeding two years or to a fine as may be prescribed in applicable national legislation.

(4) A person convicted of an offence in terms of section 71(2) is liable to a fine or imprisonment not exceeding six months.

73. This Act prevails in the event of any inconsistency between this Act and any other legislation regulating the levying of municipal rates.

74. (1) Municipal valuations and property rating conducted before the commencement of this Act by any municipality remain valid to the extent that they comply with provincial and national legislation that existed before the commencement of this Act.

(2) Any reference in prior provincial legislation regulating property rates or valuations to a "local authority," "local council," "metropolitan local council," rural council" or other unit of local government is deemed to refer to the metropolitan municipality or local municipality within whose jurisdiction a property is located.

(3) In the case of District Management Areas, any reference in prior provincial legislation regulating property rates or valuations to a "local authority" or other unit of local government is deemed to refer to the successor district municipality within whose jurisdiction a property is located.

75. (1) Until it prepares a valuation roll in terms of this Act, a municipality may—

(b) levy rates against property values as shown on that roll.

(2) If a municipality uses valuation rolls in terms of subsection (1) that were prepared by different predecessor municipalities, the municipality may impose different rates based on the different rolls, so that the tax on similarly situated properties is similar.

(3) This section lapses four years from the promulgation of this Act, and from that date any valuation roll that was in force before the commencement of this Act may not be used.

76. (1) Section 9 does not apply in respect of rates levied against a valuation roll prepared before the commencement of this Act.

(2) Section 22 does not affect the liability of a body corporate of a sectional title scheme to a municipality, nor of the owner of a sectional title unit to the body corporate, for property rates levied against a valuation roll prepared before commencement of this Act.

77. Section 115 of the Municipal Systems Act is amended by the substitution in subsection (1) for the words preceding paragraph (a) of the following words:

78. The legislation specified in the Schedule is—

(a) amended to the extent indicated in the second column of the Schedule; and

(b) repealed to the extent indicated in the second column of the Schedule.

79. This Act is called the Local Government: Property Rates Act, 2003, and comes into operation on a date to be determined by the President by proclamation in the Gazette.

1.2 Municipalities derive their power to levy property rates directly from the Constitution (See in this regard section 229 (1) of the Constitution). "Property" is not defined in the Constitution and is construed in context to mean land including any immovable property on or in the land or under the surface of the land. It includes all land in the Republic as the whole of the territory of the Republic is covered by municipalities. The constitutional power conferred on municipalities to levy property rates though, is not an unfettered power, and the Constitution does not allow municipalities to exercise this power solely within their own discretion. Firstly, section 229 (2) (a) restrains municipalities from exercising their fiscal powers in a way that would materially and unreasonably prejudice –

(a) national economic policies;

(b) economic activities across municipal boundaries; or

(c) the national mobility of goods, services, capital or labour.

And secondly, section 229 (2) (b) allows national legislation to regulate the exercise of this power by municipalities.

1.3 The Property Rates Bill is accordingly not the source of the power in terms of which municipalities may levy property rates, but an instrument to give effect to section 229 (2) (a) and (b). As such it establishes a uniform system of regulation and circumscribes the limits that are necessary to avoid material and unreasonable prejudice to national economic policies, economic activities across municipal boundaries, or the national mobility of goods, services, capital and labour.

1.4 The Bill regulates and limits the fiscal powers of municipalities in such a way as to achieve the overall White Paper objective of thoroughly reforming the current system of property taxation with a view to:

2.1.1. Chapter 1 of the Bill defines the terminology used in the Bill.

2.2.2 Chapter 2 of the Bill deals with rating. It confirms the constitutional power of municipalities to levy rates in their respective areas, but to avoid a duplication of rates in the areas of district municipalities, it vests the rating power in local municipalities. The Bill does, however, allow district municipalities to levy rates in district management areas, i.e. areas for which no local municipality has been established.

2.2.3 Rates on site only or improvements only are disallowed. The rate may either be a rate based on the improved value of property or a flat rate for property within a specified valuation band, provided the band is below a prescribed valuation limit. Flat rates would accordingly only apply to areas where valuations are at the lower end of the scale.

2.2.4 Echoing the duty imposed on municipalities by the Municipal Systems Act to adopt a tariffs policy to govern its tariffs decisions, the chapter requires councils to levy rates in accordance with a rates policy which they must adopt and regularly review. The process for the adoption of a rates policy must substantially be the same as that determined by the Municipal Systems Act for a tariffs policy, and accordingly includes community participation in the decision-making process.

2.2.5 In terms of chapter 2 rates, with certain exceptions, must be imposed on all rateable property within the municipality. The aim is that municipalities should not be selective in targeting properties for rating purposes. This provision obviously serves transparency, but is also necessary to establish a clear perspective of a municipality’s potential revenue capacity in terms of property tax. Where there is a need to alleviate the tax burden, for instance on the poor, the Bill envisages that this should be effected by way of tax exemptions, rebates and reductions. All exemptions, rebates and reductions must be in accordance with an open and accessible process and disclosed in the annual budget.

2.2.6 Chapter 2 allows municipalities within certain limits to differentiate between categories of properties when levying rates. It is proposed that a municipality may not levy:

- different rates on different categories of residential properties;

2.2.7 In line with current practice the Bill provides for rates to be adopted by a municipality by council resolution and to be promulgated by notice conspicuously displayed at municipal offices after due notice in the public media.

2.2.8 Chapter 2 also endeavours to give practical effect to the exclusions contained in section 229(2)(a) of the Constitution in terms of which a municipality may not exercise its fiscal powers in a way that materially and unreasonably prejudices national economic policies, economic activities across municipal boundaries, or the national mobility of goods, services, capital and labour. In this regard the chapter disallows rates on the following categories of property:

- mineral rights; and

2.2.9 To discourage unreasonable hikes in property rates, chapter 2 empowers the Minister, acting with the concurrence of the Minister of Finance, to set a limit, by notice in the Gazette, on the percentage by which rates on property may be increased annually. It also provides for the phasing in of rates on newly rateable property or on property of which the owner is a land reform beneficiary. Chapter 2 in conclusion provides for additional rates to be levied in special rating districts to fund improvements exclusively in that district.

2.3.1 Chapter 3 of the Bill regulates liability for property tax and states the general principle that the owner of a property must pay the rates on the property. Joint owners are jointly and severally liable for rates, but in the case of a sectional title scheme the owner of each sectional title unit must pay the rate on the unit. The body corporate in sectional schemes would no longer be responsible for collecting and payment of rates.

2.3.2 Whilst chapter 9 of the Municipal Systems Act, which prescribes a municipal credit control and debt collection system, would generally be applicable to the collection of rates, the Bill contains a number of additional provisions. These provisions relate to the method and time of payment of rates, the obligation on the municipality to furnish accounts and the recovery of arrears from tenants and occupiers and absent owners.

2.4.1 Chapter 4 of the Bill provides for the preparation and implementation of a valuation roll of rateable property in a municipality. The aim of this and following chapters was mainly to simplify the existing, extremely cumbersome, process of establishing valuation rolls.

2.4.2 In terms of the new process each municipality must appoint a municipal valuer to value all rateable properties in the municipality, to prepare the valuation roll and to submit the roll to the council. Two or more municipalities may by agreement appoint the same person as municipal valuer. A person who is not a municipal official may be appointed as municipal valuer only through an open, competitive and transparent process. A municipal valuer must be a person registered as a valuer in terms of legislation regulating the valuers profession, but a councillor may not be appointed. Municipal valuers will replace the existing valuation boards.

2.4.3 Chapter 4 provides in addition for the appointment of assistant municipal valuers, the conduct of municipal valuers, their powers and the protection of confidential information.

2.4.4 A valuation roll becomes effective as from the start of a financial year and remains valid for a period of up to four years.

2.5.1 Chapter 5 provides for the criteria in terms of which property must be valued. The general principle is that property must be valued according to its market value, i.e. the amount the property would realise if sold in the open market by a willing seller to a willing buyer. The techniques that may be used must accord with generally recognised valuation practices, methods and standards, and also the provisions of the Bill. These include aerial photography and computer assisted mass appraisal systems.

2.5.2 In the case of sectional title schemes, each sectional title unit must be separately valued.

2.6.1 Chapter 6 regulates the contents and processing of valuation rolls. It requires all rateable property to be listed on the roll, together with relevant details about each property and the owner.

2.6.2 Once a valuation roll has been completed and submitted by the municipal valuer to the municipality, the municipal manager must without delay give notice in the media that the roll is open for public inspection and that any person who wishes to lodge an objection against any entry in the roll may do so within a stated period. All objections received must then be considered and decided by the municipal valuer. If the municipal valuer agrees with an objection, the valuation roll must be adjusted accordingly. If an adjustment in the valuation of a property is more than 10 per cent upwards or downwards, the matter must be referred to the valuation appeal board for review.

2.6.3 The lodging of an objection does not defer liability for payment of rates, but if an adjustment to the valuation roll following a successful objection affects the amount of the rate payable by the owner, the municipal manager must calculate the difference and either repay or recover the difference from the owner.

2.6.4 The municipal valuer’s decision on any objection is not final, and an objector who is not satisfied with the decision, a property owner who is affected by the decision or even the municipal council may appeal against the decision to the valuation appeal board.

2.7.1 Chapter 7 provides for the establishment of valuation appeal boards. It is proposed that the function to establish these appeal boards be vested in the MEC for local government in a province. The MEC may establish as many boards as may be needed but at least one in each metropolitan municipality and one in each district municipality.

2.7.2 Appeal boards are established, firstly, to decide appeals against the decisions of municipal valuers when an objection has been lodged and, secondly, to review decisions of municipal valuers where a valuation has been adjusted upwards or downwards by more than 10 per cent.

2.7.3 An appeal board must consist of a chairman who must be a person with legal qualifications and not less than two or more than four other members with sufficient knowledge and experience of the valuation of immovable property and methods of valuation. The municipalities would be liable for the cost of valuation appeal boards.

2.7.4 As is the case with objections, an appeal would not defer payment of rates in accordance with the valuation as specified in the valuation roll, but if a successful appeal affects the amount of the rate payable, the municipal manager must calculate any over or under payment and either repay the over payment to or recover the under payment from the owner.

2.8 Chapter 8 provides for, but at the same time strictly controls, supplementary valuations.

2.9.1 Included in chapter 8 are miscellaneous matters pertaining to the Bill, such as to monitor municipal valuations, to promulgate regulations in order to enhance the effectiveness of the Bill and to render certain actions criminally punishable.

2.9.2 It also contains transitional arrangements which would, for instance, enable municipalities to use existing valuation rolls up to 4 years from the promulgation of this Bill.

The Bill was published for public comment and appropriately adjusted in view of comments received. The following stakeholders were also consulted:

Department of Housing;

Department of Land Affairs;

Department of Minerals and Energy;

Department of Public Enterprises;

Department of Public Works;

Department of Water Affairs and Forestry;

Financial and Fiscal Commission;

National Economic Development and Labour Council;

National House of Traditional Leaders;

National Treasury;

South African Council of Valuers;

South African Institute of Valuers; and

South African Local Government Association (SALGA).

The removal of the rebate on state property will have implications for national government. The Department of Provincial and Local Government conducted two studies, one in 1999 and the other in 2001, on the impact of rating state property on the national fiscus (including the Bill's impact in removing the 20% rebate, and the demarcation impact of wall-to-wall municipalities). These studies indicate that, if all municipalities rate all state property at 100% of the market value, the total bill to national government will be between R1 billion and R3 billion. This represents an additional bill of between R0.4 billion and R2.4 billion over and above the R600 million that national and provincial government currently pay. The actual impact on the national fiscus, however, cannot be exactly determined because it depends on:

* Where the state property is located;

* whether or not they provide rebates to or exemptions on state property; and

* the actual rate municipalities levy on state property.

The impact will be gradual, because the Bill contains mandatory phasing in provisions. The financial implications for local government will be quite positive. With a broadened tax base, municipal revenue potential will be significantly enhanced.

The State Law Advisers and the National Department of Provincial and Local Government are of the opinion that the Bill must be dealt with in accordance with the procedure established by section 75 of the Constitution since it contains no provision to which the procedure set out in sections 74 or 76 of the Constitution applies.