SUBMISSION BY MERITAX
PROPOSED AMENDMENTS OF THE LOCAL GOVERNMENT:
MUNICIPAL PROPERTY RATES ACT 6 OF 2004
I confirm that the objections that I have been given
an opportunity to raise orally are simply sec19.1a and 20.1b as below:-
We request that the impermissible
differentiation of residential properties as sec 19 (1)a
is deleted as follows
[Impermissible differentiation
19. (1) A
municipality may not levy
(a) different rates on
residential properties, except as provided for in sections]
This is because sec 19 (1)a
unfairly discriminates against residential properties and so contravenes sec 9
of the Constitution. Municipalities can use differential rates as sec 8
for the rating of non-residential properties or property categories and this
amendment will allow Municipalities to levy rates which are a fixed proportion
of prevailing property rents across the Municipality.
Thus a Municipality will be allowed to set a rate
which is equal to (say) six weeks rent for all rateable properties within its
boundaries [or for whatever period is necessary] to match the budget needs.
In this way the important "ability to pay
principle" which now attaches to non-residential properties can be
extended to residential properties so that every property in a Municipality is
equally disadvantaged by rates and taxes.
In the same way the limits on annual increases of
rates in sec 20(2)b should be deleted as follows
Limits on annual increases of rates
20. (1) The
Minister may, with the concurrence of the Minister of Finance and by
notice
in the Gazette, set an upper limit on the percentage by which rates on
properties
or a rate
on a specific category of properties may be increased.
(2) Different limits may be set in terms of
subsection (1) for-
(a) different kinds of
municipalities which may, for the purposes of this section,
be defined
in the notice either in relation to categories of municipalities within
the
meaning of the Municipal Structures Act or in any other way; or
(b) different
categories of properties, subject to section 19.
(3) The Minister may, on written application by a
municipality, and on good cause,
exempt
a municipality from a limit set in terms of subsection (1).
Further explanation. The purchase price of a
property is its rent times its p/e ratio.
Therefore a differential rate is calculated as a rent or a portion of a rent by
using tables as below.
Otherwise
rates will always be tied to market values which in this graph vary
dramatically between seven and fifteen times the rent.
Rental
variations are much more manageable.
Trafalgar Rental Index for June’2007
|
Place |
Dec-03 |
Jun-04 |
Dec-04 |
Jun-05 |
Dec-05 |
Jun-06 |
Dec-06 |
Jun-07 |
|
|
100 |
103.79 |
109.78 |
112.22 |
117.36 |
119.44 |
125.43 |
129.30 |
|
|
100 |
100.28 |
111.28 |
114.62 |
118.24 |
119.09 |
130.79 |
133.24 |
|
|
100 |
105.46 |
116.29 |
115.60 |
126.47 |
133.31 |
141.03 |
151.57 |
|
KZN |
100 |
100.62 |
110.45 |
115.79 |
118.44 |
124.22 |
131.03 |
133.94 |
|
|
100 |
101.54 |
107.38 |
110.84 |
115.04 |
115.81 |
117.66 |
115.09 |
|
|
100 |
100.15 |
104.76 |
111.94 |
117.26 |
124.20 |
128.31 |
133.36 |
|
|
100 |
105.34 |
110.07 |
111.18 |
111.92 |
118.18 |
122.32 |
126.20 |
