ANC Submission on

CITY OF CAPE TOWN DRAFT RATES POLICY FRAMEWORK

April 2002

1. Key Principles

We believe the key principles outlined need to be interpreted and expanded in the following manner. These expanded principles form the foundation to our response to the issues and options.

Equity: - We agree that the system must be fair.

• Everyone must pay their fair share.
• We know that historically the poor have been subsidizing the rich and this must stop immediately.
• We believe that a fair system can and should allow the rich to subsidize the poor.

Affordability: - In considering affordability, the total municipal bill (water, sanitation, solid waste, electricity and rates) and not only the rates bill must be considered.

• Further affordability to the poor and not to the rich must only be considered as the rich can adjust their standard of living while the poor can´t.

Poverty alleviation: - We agree that the poor must be assisted.

• This assistance must not be seen in a narrow sense of a reduction in rates but in a broader sense.
• This broader sense must include the delivery of basic levels of service* and
• Focus on the delivery of community facilities in poor areas. Residents in affluent areas generally have access to existing above standard Council facilities and to private facilities.
• The ANC believes the basic levels of service* throughout the metro should be set at:
  • Metered household water connection
  • Waterborne sewerage
  • 240l weekly kerbside refuse collection
  • 60Amp House Electricity connection
  • Regular street sweeping

Social and economic development:

• We believe that the social development focus should be in poor areas to support poverty alleviation (see above).
• Business should subsidize residential properties but the extent of the subsidy must be balanced so as not to undermine economic growth.
• Additional rates incentives to promote economic growth should be focused in the nodes and corridors of the poorer areas (e.g. Philippi Center, Wetton Lansdowne Corridor, Mitchell´s Plain Town Center)

Financial sustainability & cost efficiency

• Financial sustainability will only be achieved if the municipal bill is affordable to the poor. (see Affordability above)
• The system must be simple to understand and simple to implement.
• Residents must perceive the system as fair.
• It must integrate with an indigent policy that the Council must adopt.
• It must be properly communicated.
• Special attention (education and communication) must be given to those who have not paid rates before.
• The poor must be able to see benefit of paying in concrete improved social and community development in their areas.

1. Issues & Options

Issue 1:

Option A:

The new roll must be implemented in July 2002. There can not be a phase in. Those that will experience large rates increases (which includes the affluent) have had the benefit of paying less than their fair share for many years and have further benefited in the massive growth in values of their property. The City and the poor can not subsidize them any further.

Issue 2:

Option A

This option supports the principles of equity and affordability. Basic levels of service must be subsidized (legislative requirement) and payment through rates gives the services a stable base income. It is also supports environmentally and financially sustainability and we believe in the best interest of city:

We believe that the basic levels of service that should be charged through the rate account are:

1. Waterborne sewerage.
2. 240 l weekly kerbside refuse collection.
3. Regular street sweeping service.

Services that are not basic, must be available to all areas, and must be charged though tariffs that recover the full costs of the service, are:

1. More than 240 l weekly kerbside refuse collection.
2. Garden refuse collection.

Issue 3:

Option A:

Separate categories for

• Poor households (value between R 30 000 and R45 000)
• Commercial & industrial properties in identified development corridors & nodes in disadvantaged areas (to create jobs in poverty areas)

Option B:

There could be a residential rebate as residents can´t recover Vat and domestic rates are paid from income net of tax. However the rebate must not be excessive and must not undermine economic development. The extent of the rebate must be set in conjunction with initial amount rebate of Issue 5.

Issue 4:

Option A:

Agree but it must be simple. All recipients of state old age pensions & of state disability grants must be included automatically (minimum administrative burden of proof). Pensioners and people with disabilities with limited fixed income and upper limit on property value must also receive the rebate. The old City of Cape Town Scheme should be extended across the metro.

Option C:

Disagree strongly. This is a pro-affluent and not a pro-poor

Incentive. It is inconsistent with the principles.

Issue 5:

Option A:

Agree. The initial R30000 of all properties should get a 100% rebate i.e. be zero-rated. Most houses under this ‘value´ do not trade and there is no real ‘market´.

A second rebate group could be properties from R 30 000 – R 60 000 for the same reason as above (no market). This group could get a second residential rebate on a slide scale e.g.

Option B:

Agree

Issue 6:

Agree with all 3 options.

If areas of urban neglect (where commercial enterprise and investment is hampered) are identified, clear guidelines that would prevent unfair advantage to wealthy landlords or slumlords would have to be set.

Issue 7:

Incentives or rebates for investment, economic development, job creation, raising tourist profile, etc. should only be used if there is ‘market failure´ and should only remain in place until ‘market forces´ are established (i.e. a limited but flexible time).Such an approach should be centered on

1. Designated poor development areas (nodes and corridors).
2. Public owned nature reserves and National parks.

We would not be supportive of rebates for sports facilities that are profit-making ventures, even if they host national and international events.

A rebate for agricultural land can only be considered for land that is actually used for agricultural purposes.