Minister of Cooperative Governance and Traditional Affairs on the Review of the Municipal Property Rates Act

 

Q: The Minister noted that there was a lot of exploitation taking place when it came to property evaluations. In which areas of the country was exploitation most rife?

A: The Minister replied that he did not want to “name and shame” the municipalities in the country. However, he assured the media that there were people who had come forward and raised the issue. This was why he was taking measures to prevent people being exploited.

Q: How did the Minister define the category of poor people that he wanted to protect? Looking at people who could afford to pay rates but were not doing so, did the Minister accept that the reason was because municipalities were not providing them with services that were supposed to be rendered? How seriously was the Minister taking the attack by the National Taxpayers Union (NTU)? Was credence being given to their argument that they were revolting against the non-provision of services?

A: The Minister replied that he was trying to ensure that there was equity between the Cooperative Governance and Traditional Affairs (CoGTA) sector and the Minister of Finance. Every year the Minister of Finance looked at people within a certain low income bracket and excused them from paying taxes. This would be applicable to rates payments. Anyone who was below a certain income threshold would not have to pay rates.

The Minister understood the reasons why people did not pay rates. He understood protests against paying rates for services that were not rendered. In many cases people were burning tyres and becoming more violent. This was not acceptable. People had a right to protest but their actions had to be appropriate. South Africa was not a lawless country and the rule of law had to prevail at all times.

The Minisiter informed the media that he would be meeting with a rate payer’s organisation in Pretoria on 29 March 2010. He wanted to work with the rate payers associations to promote partnerships with government and in so doing would find solutions to problems and concerns identified by rate payers. The Minister had spoken to the NTU through the media even though the NTU had never spoken to him directly. He was starting a process of engaging with all organisations who wanted to find the solutions to problems regarding rates payments. If this did not work, he would apply the law.                            

Q: Do you exclude new laterals for water when you talk about infrastructure? What should this be paid from? Is the Minister saying that the current consultation processes at municipal level are inadequate?

A: The Minister replied that local government had three streams of income. The first was nationally raised revenue called equitable share. This was linked to the Municipal Infrastructure Grant (MIG). The second stream of income dealt with surcharges such as for water, electricity and sanitation. Municipalities charged more for these services so that they could acquire a profit, which would be used for the expansion and maintenance of those services. The third stream of income came from property rates, which were being focused on now. It came to the Minister’s attention that municipalities were using the resources of one stream against the other without improving the conditions of the service they were supposed to be attending to. At the end of the day, municipalities were “robbing Peter to pay Paul”. This was what the government wanted to deal with. The government wanted municipalities to use the money for what it was supposed to be used for.

The Minister accepted that consultation processes in the country, in terms of ward committees, one were could raise concerns with their councilors were not up to scratch. This meant that concerns could not be processed and handled. The Integrated Development Plans (IDPs) was an instrument for development and delivery. However, it had been undermined by national and provincial government departments, and State Owned Enterprises (SOEs). Those entities did not participate in addressing problems and if they did, they sent junior officials. The Minister wanted to strengthen the system to ensure that if projects were not included in IDPs, then it would not be implemented. South Africa had “wall-to-wall” municipalities. Every part of the land was overseen by a municipality. Therefore, if a municipality did not approve a project, it would not be implemented. The Ministry was engaging with every municipality and asking them to look at their own strategies and implementation plans. This was part of the Local Government Turnaround Strategy and would be concluded in April 2010. The intention was to find out the needs and states of the municipalities. The Minister also wanted to strengthen public participation structures in ward committees so that they could become of value to the people and contributions could be taken seriously. Most service delivery protests were due to lack of communication.

Q: Is there a figure the Minister can put on the amount of rate relief that would be given?

A: The Minister replied that it was too early to answer this question.

Q: How much money was recovered by the municipalities that were not able to implement the Municipal Property Rates Act?

A: The Minister replied that the financial year for municipalities was going to come to an end in June. Municipalities had collected approximately 60% of the money they were supposed to have collected. The Minister was in the process of disaggregating the debt so that he could see who owed the municipalities money. He hoped the matter would be taken to Cabinet in April 2010. 

Q: With the relief there would be less income for poor municipalities. How does the Minister plan to make up for these losses? How would the government subsidise this loss of income for municipalities that were in great need of infrastructure development?

A: The Minister replied that the Intergovernmental Relations Framework and the allocation of resources between the three tiers of government had not been accurate in the past. The reason was because it was premised on the idea that municipalities would raise 95% of their own revenue themselves. In reality, all but 39% of the money that went to municipalities was from grants. The second weakness was that the rule for allocating money was base on the population in a municipal area. It was not based on backlogs, viability or topography. The Minister was requested by the President to lead a programme of review of all the intergovernmental and fiscal relations. He would be addressing the issue to ensure that when money is allocated, the government would be biased towards the poor municipalities that could barely stand on their own.

Q: What punitive actions would be taken against people who were not paying their rates?

A: The Minister replied that he was more interested in finding solutions to the problems. South Africa was a good country. Even people who left to go to Australia or the UK were coming back in droves. The people and the government had to stand together and find solutions to the problems. In the event of the worst case scenario, the government would be able to use the laws of the land to force people to pay for what they consumed. He hoped that the government would not reach this stage and that an alternative solution would be created.

Q: Who is responsible for paying rates if property is leased or rented? If property is leased from the government, who is responsible for paying rates?

A: The Minister replied that it was the person that used the property that usually absorbed the costs. The person that was leasing the property usually factored in the rates when they charged rent. Municipalities usually charged the person who was recorded as the land owner. This included the government.

Q: Approximately how many people would be exempt from paying rates?

A: The Minister replied that it would depend on the amount of people who were exempt from paying taxes. He did not have the figures for this at the moment. The government was hoping to build an accurate database as the process went along. At this point in time, the data was inaccurate.

Q: Is the Minister going to make sure that the review process is completed before or at the same time that the Municipal Property Rates Bill is amended to ensure that municipalities could be granted enough funds before the tax relief is implemented?

A: The Minister replied that from July to October, “household profiles” would be conducted with an IT system that would be able to tell the government everything they needed to know about South Africans. By this time, the government would be able to complete the review of the municipalities’ situation. This process was necessitated by the service delivery protests in the country. It said that the government did not know its communities properly and did not understand its pressures. The government had to find solutions that would target problems directly. These processes would give the government accurate data that would assist it in planning properly and accurately.

Q: Would this process be a sort of mini-census given that there has not been one for a few years? Is the exemption of judicial communities a disincentive for the implementation of the Communal Land Rights Act (CLaRA)? How much money does the government owe municipalities?

A: The Minister replied that the government had not discussed the issue with Statistics South Africa (Stats SA) as to whether a mini-census would be conducted. However, they were looking at it from the perspective of the needs of municipalities. For the government to plan properly, it needed accurate information. Stats SA were welcome to join CoGTA if they wanted to.
 
The Minister indicated that the government wanted to review the ClaRA because some sections of the Act were found to be unconstitutional, and because traditional leaders in traditional communities felt that CLaRA was unworkable. The forms of tenure in South Africa were still issues that needed to be looked at.

Finally, the Minister added that the government was till busy disaggregating the debt. However, he could assure people that it was not less that R2 billion.

The briefing came to a close.

 

MEDIA RELEASE

Public Hearings on Municipal Property Rates Act Review

Pretoria, 25.03.2010 –The Ministry for Cooperative Governance and Traditional Affairs (CoGTA) will embark on public hearings during April 2010 to engage property owners across the country on the proposed review of  the Municipal Property Rates Act, 2004 (MPRA).

 

The Ministry will conduct these hearings in an attempt to reach out to ordinary ratepayers, ratepayers’ associations, community representatives, farmers, industry, organised business, mining chambers and owners of public service infrastructure to solicit their views and inputs on the current Act with the objective of improving it for the benefit of citizens.

 

The MPRA makes provision for municipalities to value properties in their jurisdictions and impose property taxes to fund the provision of public goods that benefit communities. However, in its current form the Act has been inconsistently applied by municipalities, which has resulted in an inequitable and inefficient implementation of the MPRA. This has left poor households vulnerable to unaffordable taxes and has also resulted in the inequitable treatment of ratepayers in general.

 

Currently, the exemption of poor or indigent households and households owned by those dependent on social grants from rates payment is a municipal decision. This may result in these households being subjected to paying municipal rates where municipalities do not make provision for their protection in their rates policies.   In addition, the equitable and fair rating of different property categories is proving to be difficult to manage.

 

 

The proposed amendments are intended to address these and other inconsistencies and provide for a more equitable, consistent and transparent application of the Act.   

 

Public hearings in all provinces will begin on 06 April and end on 30 April 2010. Refer to attached schedule indicating actual date and venue in respect of each of the nine provinces. Public inputs will be given due consideration and where necessary incorporated into a draft Municipal Property Rates Amendment Bill which will be submitted to Parliament in September 2010.

 

South African citizens are encouraged to make use of this opportunity and participate in this process because the amended Act will affect them. The current Municipal Property Rates Act is available on the CoGTA’s website (www.cogta.gov.za).

 

Concerned parties can visit the website to download a copy of the Act, the list of public hearing venues that are nearer to them and other documents relating to the hearings. Inputs of citizens can also be forwarded to CoGTA by sending an e-mail to [email protected] or fax to (012) 334-4811, and this must reach the department before the cut off date of 3 May 2010.

 

The MPRA review forms part of a series of local government laws that are under review as CoGTA embarks on a process that will allow for a more efficient implementation of the Local Government Turn Around Strategy (LGTAS) and effective service delivery to citizens. The LGTAS is the department’s response to various challenges that are facing municipalities, as was shown in the State of Local Government in 2009 Report (www.cogta.gov.za).

 

Issued by the Ministry for Cooperative Governance and Traditional Affairs

 

For further enquiries or interview requests please contact:

 

Craig Meyer

Senior Communication Manager

Contacts: 084 506 1701

Email: [email protected] copying [email protected]

  Schedule of Municipal Property Rates Act Review Public Hearings

PROVINCE	DATE OF PUBLIC HEARING	VENUE	TIME
EASTERN CAPE	Tuesday 6 April  2010	Provincial Legislature, Independence Avenue, Bhisho	09h00
NORTH WEST	Friday 9 April 2010	Provincial Legislature, Dr James Moroka Drive,  Mmabatho	09h00
LIMPOPO	Monday 12 April 2010	Jack Botes Hall, corner Kerk and Bodenstein Streets, Polokwane	09h00
FREE STATE	Thursday 15 April 2010	The Chamber, Fourth Raadsaal, President Brand Street Bloemfontein	09h00
MPUMALANGA	Monday 19 April 2010	Nelsville Hall, Grace Street, Nelsville, Nelspruit	09h00
NOTHERN CAPE	Thursday 22 April 2010	Provincial Legislature, Northern Noben Bula Extension, Galeshewe, Kimberly	09h00
GAUTENG	Monday 26 April 2010	Johannesburg City Hall, Corner Harris and President Streets, Johannesburg	09h00
KWAZULU-NATAL	Wednesday 28 April 2010	The Chamber, KwaZulu-Natal Provincial Legislature, 239 Langalibalele Street, Pietermaritzburg	09h00
WESTERN CAPE	Friday 30 April 2010	Old Assembly Chamber in Parliament, 120 Plein Street, Cape Town	09h00