DA proposes three measures to ease tax burden on Tshwane consumers

Note to Editors: Please find an English soundbite by Cllr Jacqui Uys here

The Democratic Alliance (DA) in the Tshwane Metro is proposing a set of measures to relieve the burden on ratepayers and municipal consumers ahead of the publication of the draft 2025/26 municipal budget.

The national context:

South Africa has endured more than a decade of negligible economic growth. While prices have continued to go up, incomes have stagnated. South Africa today has the same per capital GDP than it had in 2008.

Despite compelling arguments from the DA in the government of national unity, the ANC seems unwilling to consider policy measures to unlock economic growth, instead of simply raising tax.

National government is not the only tax authority in the country. Municipalities taxes and service charges also contribute to the pressure of on consumers. Part of the problem is that municipalities must implement expensive and ineffective national legislation, such as preferential procurement.

But municipal councils must do everything in their power, no matter how limited, to relieve the excessive burden on South Africa’s taxpayers. While the city administration and council in Tshwane will be eager to take steps to improve the city’s financial position, decision-makers must trim their sails to what consumers can afford.

Preference should be given to tax neutral revenue raising measures, including: 

• The rollout of smart prepaid electricity meters that minimise theft and waste, and enable consumers to budget for consumer. Having experience of the rigged PEU/Tums smart meter tender of the ANC-era, the municipality already has a crystal clear idea of what not to do in preparing such a project.
• The digitisation of billing disputes so as to ensure that the city takes credit control measures based on accurate information, and having taken into account disputes within a reasonable period of time.
• Public Private Partnerships that can source private sector expertise and capital for the upgrade of service infrastructure, which will in turn reduce distribution losses (leaks and theft).

Three risks that could escalate affordability crisis in Tshwane:

Tshwane faces three affordability risks. Not only is a new property valuation roll, for the purpose of levying property rates, being prepared. The city will also consider a network access charge for electricity in line with a new NERSA-approved tariff structure, as well as introducing a new tax in the form of a city cleansing levy payable by all property owners.

From the valuation increases that DA councillors have seen, it is clear to use that Tshwane will increase its income from property rates significantly. Under the Municipal Property Rates Act, a municipality must complete a general valuation roll every four years.

Tshwane’s last GVR was completed in 2018. Due to the disruption caused by the city being placed under provincial administration, coinciding with the Covid-19 lockdown, a new GVR could not be completed by 2022.

On the electricity front, municipalities have had to adopt cost-reflective electricity tariffs in order to comply with NERSA guidelines. These tariffs will enable costs to be managed more effectively, but are dangerous in the hands of poorly managed councils which have little regard for the pockets of municipal consumers.

Illegal dumping is an ongoing problem in The City of Tshwane and the city’s solution for this is the introduction of a new tax, the city cleansing fee.

These changes could not come at a worse time for residents, with the ANC-led coalition having cut contracted services for regional service delivery in the February budget adjustment. Services affected include attendance to water and electricity outages as well as grass cutting, pothole patching and grass cutting.

At the same time appointments have been frozen and overtime cut, leading to prolonged, unattended power outages across the city – from Soshanguve to Centurion. There has also been a notable increase in the time it takes city teams to respond to water and sewage leaks.

This is a ‘penny wise, pound foolish’ approach to service delivery. It is likely to result in more damage to infrastructure, including increased cable theft which happens during prolonged outages, as well as increased water distribution losses.

0% increase in property rates tariff and increasing portion of a property’s value which is not rateable.

Property rates have three components: the classification of the property, or its use (agricultural, residential, or business), the market value of the property as determined by the process of municipal valuation, and the tariff charged for each category of rateable property.

Whereas property categorisation and valuation are meant to be technical and objective processes, the determination of the tariff payable by municipal property owners is a decision of the municipal council, and therefore political.

The DA proposes that the council of the Tshwane Metro, taking note of the already heavy tax burden on South Africans, and the effect of the aged GVR, take the following measures: 

1. A 0% increase on the tariff charged for each of the rateable property categories when compared to the previous financial year – the city will already enjoy a significant bump in revenue from new valuations alone;
2. Increasing the portion of the value of residential properties that are not subject to property rates from the current R150,000 to R450,000 – this is closer to the norm adopted by other metros, and will bring considerable relief to all property owners. The city should also consider exempting a portion of the value of business and agricultural properties from property rates; and
3. No new taxes to be introduced. Poorer households are already paying 5-10% of their monthly income on having bins lifted, it is also these same households that will be hit hardest with the introduction of a new electricity tariff. The focus should rather be on law enforcement on both illegal dumping and theft of electricity as a way to fund the electricity model of the city.

These measures will only be effective and sustainable if coupled with the other measures which the DA and our coalition partners adopted as part of the Mayoral Charter on Financial Rescue under the mayorship of Cilliers Brink. To the best of our knowledge this Mayoral Charter has not been rescinded by the ANC-led coalition.