PUBLIC HEARING BY THE PORTFOLIO COMMITTEE ON PROVINCIAL AND LOCAL GOVERNMENT HELD ON TUESDAY 15 OCTOBER 2002

 

OBJECTION TO THE ENACTMENT OF CERTAIN PROVISIONS OF THE LOCAL GOVERNMENT LAWS AMENDMENT BILL, 2002.

  1. This objection to the amendment proposed relate to the validation of the Provisional Valuation Roll prepared by the City of Cape Town valuing properties in the City as of 1st January 2000.

  2. It is common cause that the Property Valuation Ordinance 1993 (Cape)("the PVO"), was not validly assigned to the Western Cape Province and it was also not validly amended in the Western Cape.

  3. It is also common cause that "national legislation" amending the relevant Act may only be enacted by Parliament after certain procedures and formalities have been adhered to in terms of Section 229 (5) of the Constitution. The necessity of doing this has been agreed to by the legal representatives of the City of Cape Town and by the legal adviser to the Department of Provincial and Local Government. At the briefing held by the Committee on 25 September 2002 Mr. Bouwer, the legal adviser to the DPLG produced a letter saying that the draft Bill had been sent to the Financial and Fiscal Commission in terms of Section 229 (5) of the Constitution and their reply stating that the Commission had no comments. Subsequent to the briefing it has been established that although the draft Bill had, in fact, been submitted to the Commission it had not been dealt with by the Commission as such but only referred by the Chairman of the Commission to certain executive members. It is submitted that this does not fulfill the provisions of Section 229 (5). Furthermore, no evidence has been submitted showing that the draft Bill was submitted to organized local government (SALGA).

    4. It is our submission that the Department of Provincial and Local Government should have comprehensively informed that Financial and Fiscal Commission of the reasons that the amendments were being sought and, in the circumstances, it was ill-advised not to inform the Commission that the legal challenge to the PVO had been filed in the Cape High Court on the 27th June 2002 specifically referring to the amendment to the law that was being proposed by the City of Cape Town. It was also unethical not to inform the Commission of the radical change to the rates structure in the City of Cape Town that would be occasioned by the amendment being passed by Parliament. It is our submission that it was both devious and dishonest of the City of Cape Town to pretend to your Portfolio Committee that this was a "technical" amendment. The real effect of the amendment would be to change the rating structure in Cape Town into a punitive wealth tax which would have the effect of many thousands of real ratepayers having to sell their homes. The actual consequence of the amendment would create an impossible legal situation where the ratepayers’ rights under the Constitution and the PVO to have a public participation process are swept aside by fast-tracking a law through Parliament. In the Cape Town City Council’s papers filed in the Cape High Court it is acknowledged that they have been aware of the legal flaws since the middle of 2001. Measures to avoid this type of situation have been copiously dealt with in the Draft Bill on Property Rates which, after its 18th draft is expected to be dealt with in Parliament in 2003.

  4. It is further submitted that Parliament should not enact legislation that will have a bearing on or will frustrate a litigants case in a matter which was filed in June 2002 and which will be heard by a full bench of the Cape High Court the 11th November 2002. In this regard the Committee is referred to the decided case

    5. "CORIUM (PTY) LTD AND OTHERS V MYBURGH PARK

    LANGEBAAN (PTY) LTD AND OTHERS

    Case No. 12799/91 1994 (CPD)"

  5. Notwithstanding our objection an amendment which will validate the PVO, we also have a serious objection to the validity of the amendment that was made to the Local Government: Municipal Structures Act. That particular Amendment Bill [B51-2000], was also not formally referred to the Financial and Fiscal Commission in terms of Section 229 (5) of the Constitution and that particular section is, in our opinion, also ultra vires. Should Parliament, notwithstanding objections, make the amendments as requested, we will have no option but to challenge the validity of the 2000 Amendment to the Municipal Structures Act and PVO. We believe that the City of Cape Town was well-aware of the fatal flaw in that Amendment as in their proposed amendment of 11 June 2002 (directed to your Committee) they suggested on page 2 an amendment repeating the provisions of Section (6A). For whatever reason, that proposed amendment by the City of Cape Town is not included in this draft Bill.

  6. Our final submission is that the 1996 Constitution was carefully drafted to stop municipalities exploiting what the Constitution described as rates on property and surcharges on fees for services provided by or on behalf of the municipality. The Constitution (Section 229 (1)(b) expressly forbade municipalities from imposing income tax, value added tax, general sales tax or customs duty. The present policy of the Council of the City of Cape Town is to impose a wealth tax based on the market value (sic) of the property. We have evidence that a councilor of the City of Cape Town’s erstwhile ruling party stated this new tax to be a wealth tax and also evidence of a senior official in the budgetary department of the City Council stating at a substructure meeting that the new rates were in fact a wealth tax.

  7. It is therefore respectfully suggested to your Committee that, if for any reason whatsoever, it queries the legal arguments and facts laid before you the matter should be referred for legal advice.