19 February 2004
Madam Speaker
Ministers and Deputy Ministers present
Honourable members
The Municipality Property Rates Bill is a comprehensive framework for property rating and to regulate property rates as provided for in section 229 of the Constitution. The Bill provides a uniform framework for levying rates and extending the tax base. While this Bill brings uniformity to the entire area of property rating, a very important goal of the Bill is to address a number of inequalities that have occurred in property rating. One way to achieve this is by making it compulsory for all municipalities to tax the improved value of land, that is, the land plus buildings or developments that have taken place on the land.
The Bill provides for circumstances in which certain properties or categories of properties can be given rates exemption. The Bill exempts the first R15 000 in value of all residential properties from property tax, but does not prescribe to the municipality in terms of extending this exemption.
This means that municipalities will still have the discretion to exempt a portion of the value of a property from taxation. In some municipalities, including Cape Town, the first R50 000 of residential property is exempted from paying rates. Used as part of a municipality's pro-poor policy, this means that small houses in poor communities will not receive a rates bill at all if the house is valued at below the exempted figure. The beneficiaries of land reform programmes will be exempted from rates for a 10-year period following the return of their land.
Policy Implication for Municipalities
The Municipal Demarcation has created municipalities across South Africa, which means that all properties can now be valued for rating purposes. The benefit of this is that a broader tax base is created so that all property owners contribute to the revenue of the municipality that they are part of. However, municipalities need to deal sensitively with property owners who have never before paid rates, such as some township and rural communities as well as owners of farms who have raised concern through organised agriculture. And SALGA has to play a significant role in this regard. The joint effort by SALGA and the department must assist municipalities to undertake special civic education and awareness campaigns to explain the concept of rates and how the income is used. Municipalities will also have to consider the contribution made by farmers to the local economy and the extent to which agriculture assists delivery and development obligations when setting its rates policy.
The Bill is but a shift from the previous rating regime that was discriminatory in nature. The Bill provides for a three-year phase-in period for newly rateable properties. It also requires each municipality to adopt and annually review a rates policy in consultation with the local community. When designing the public participation process, it is required that attention be paid to disadvantaged groups like woman.
The new rates regime also includes appropriate measures to alleviate the rates burden on poor households, it must also be a tool to promote, local, social and economic development. This is made possible by section 15(2), of the Bill that grants exemptions, rebates or reductions to owners of properties such as, indigent owners, owners dependent on pensions or social grants, owners temporarily without income and owners of property situated within an area affected by a disaster.
Restrictions on Municipalities
Although the application of this Bill will be significantly challenging, given the capacity constrains of both local government and valuers in dealing with this Bill. It is however, safe to say that this new piece of legislation heralds another step forward for local government in South Africa. For residents and ratepayers, the Bill brings a uniform, national approach for the first time, with a new level of transparency.
The Bill will also bring added stability to municipal income streams, which are vital for local development. Revenue generated by rates will fund a wide range of services including community services, basic services to households that cannot afford them and supporting good governance. The requirements of the legislation require municipalities, the department and SALGA to play an active role and dedicate considerable time and effort to both the process of valuation and, just as importantly, to developing a policy in partnership with residents in terms of which rates will be levied.
This envisaged system of rating is perhaps the most important strategy for local economic management and the implementation of it will guarantee that municipalities conform to a single approach to property rates and will make it possible to determine the fiscal capacity of municipality.
A re eleng tlhoko ka tsa di latelang mo Billing e bgaetsho!
Baagi le bona ba fiwa tšhono ya go tsaya karolo mo tshekatshekong e.
Ga go ope o o katelwang segaswa mo ganong.
Kwa bofelong, matlhomo a Bili e, ke go tlisa ditlhabololo mo tikologong ka tirelotsweledi ya boMasepala le go tsholetsa maemo a Ekonomi.
Bosa bo Sele!