Council rates 'need rethink'

Pretoria - The hikes in municipal property rates are unaffordable and driving people from their homes.

This is according to Anton Bredell, Western Cape Minister of Local Government, Environmental Affairs & Development Planning.

Bredell called for a debate on the system for - and legislation regarding - municipal rates, in an effort to arrive at the "best solution".

He will submit his proposals to the Western Cape Cabinet, which will ultimately take it to national government for discussion.

He reckoned provinces are able to draw up their own by-laws for property rates.

Bredell said the system of applying market valuations for land and improvements that is prescribed by the Municipal Property Rates Act of 2004 is expensive, and the provisions of the act are too sophisticated for struggling municipalities.

He said he has to deal with elderly people every day who have lived in their homes for years, but who cannot afford the higher property rates any longer. "They sell their furniture to pay their rates accounts," he said. Others affected are poor fisher folk who 30 years ago bought homes close to the ocean. Because of developments in the market for coastal properties these little homes' market valuations have shot sky-high, and the property rates are beyond the owners' ability to pay.

Bredell pointed out that property needed to be revalued every five years. This meant that the next round for most municipalities will be in 2012. The property market is not expected to have recovered from the current slump by then, and property values will be considerably below the 2007 valuations.

A municipality has to collect the same or an inflation-adjusted income from the same rates pool. The implication is that the poor and middle markets would have to pay "four to five times more" in rates.

Bredell said new thinking is required about municipal property rates system.

He asked whether an allocation of the VAT collected in each municipal area to the relevant local authority would not be a better system.

Ben Espach, director of valuations at Rates Watch, said the problem with the Municipal Property Rates Act arises from an unwillingness on the part of municipalities to invest in systems, as well as the loss of skilled personnel.

According to him, Tshwane, Johannesburg and Ekurhuleni have under-recovered their property rates because they lack proper systems to send accurate accounts to the right addresses.

The result was that rates are being pushed up to collect even more money from the small group that is actually paying.

- Sake24.com

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