MFPFB- 7 COMMENTS ON THE MUNICIPAL FISCAL POWERS AND FUNCTIONAL BILL
CHIEF FINANCIAL OFFICER: CITY OF TSHWANE

I would like to give my comments as follows:

Section 5(2)

My concern is that it will take the Minister 6 month to notify the municipality. municipalities or organized local government and the Minister responsible for local government the intention to authorize the municipal tax and by no later than 12 months after the notification prescribe the regulations.

The implication of this is that it will take almost 18 months from the date of application for the municipality to actually implement the municipal tax. The time taken will have major impact in terms of service delivery and by the time the regulation is gazetted, the tariff will have already gone up or the CPIX changed in such a way that the new revision will be required.

Furthermore. if the regulation is gazetted mid of the financial year. the municipality will have to wait until the beginning of the financial year.

Chapter 4 section 10 (2)

Regulations will only be reviewed every five years. This is very long; in fact regulations should be reviewed every two years at least.

GENERAL

Heading of Section 229 is about Municipal Fiscal Powers and functions and one may say this is all about Powers vested into the Municipalities. Section 229(2) (b) stipulate that the powers of a municipality to impose rates on property surcharges on fees for services provided by or on behalf of the municipality, or other taxes, levies or duties may be regulated by national legislation. As the constitution say may be regulated, my submission is that this be left in the hands of the municipal council as the council is the one which understands the needs of the community. I also believe that the Council is also capable of making sure that when exercising their powers. they will do that in a way that will not materially and unreasonably prejudice national economic policies, economic activities across municipal boundaries, or the national mobility of goods, services, capital or labour. Municipalities are over regulated in such a way that this undermines and hamper service delivery. At the end of the day. when they is no services to the community, it is the councilors and more specifically the executive mayor's who are criticized and not the Ministers who make the regulations.

Through circulars. National Treasury gives guidelines on how tariff need to be increased, and this also undermines service delivery. When there is no resources to provide basic service to the poorest and if you approach NT regarding this. the advice you are given is that municipalities should go and borrow. The question that needs to be asked is who will pay for that debt. When the Minister of Finance delivers his speech during February, he indicated that the way the country was indebted, a decision has to be taken not to increase the debt but to reduce it. Now the country is having surpluses. But immediately after that speech, municipalities are encouraged to go and borrow as National government has no money to give to municipalities to deliver basic services to the poorest. Municipalities will borrow for basic services, 2010 and still be given guidelines, regulations on how to increase tariff, impose surcharge and introduce municipal tax. This really put Chief Financial Officer in trouble, as the resources is required, and when you suggest for tariff increases which is above the guidelines, no one understand why or if they do, but still it is argued that tariff cannot be increased above the guideline. Even if you go and borrow, tariff need to be increased so that they is enough for repayment of interest and capital.

Conclusion

In order for the municipality to achieve its objects as stipulated in section 152 of the Constitution and in order to play its developmental duties as stipulated in section 153 of the Constitution, the National and Provincial government should not compromise or impede a municipality's ability or right to exercise its powers or perform its functions.

Hope the comments will assist in the finalization of the bill

N. Makhari

Chief Financial Officer: City of Tshwane