Salga reiterates call for local business tax

2012-01-13 14:08

The SA Local Government Association has reiterated its calls for government to introduce a tax on local business to aid ailing municipalities after a Treasury report painted a bleak picture of some councils in “financial distress”.

The association defended some municipalities, saying the expectations on local government to deliver, without the skilled and qualified managers in key positions, set councils up for failure to manage their finances.

Aside from a proposed local business tax to fund economic services and infrastructure, Salga’s recommendations include promoting peer learning and support between municipalities and private institutions (for example, banks) to continuously improve systems of financial management.

Treasury’s report on the financial performance of municipalities between June 2010 and June 2011 noted some improvements but highlighted failures in most areas.

Treasury said new mayors were more concerned about the cars they drive and the perks they get than they were about serving communities, a trend it noted was still ongoing.

Salga said Treasury’s report should have captured the fact that municipalities’ poor audit outcomes have gone down by as much as 48%.

“It is imperative to note that the financial performance of municipalities should not be looked at in an isolated year but should focus on trends over time,” said Salga.

While more work still needed to be done, the improvements at local government level should not be undermined, said the association which speaks on behalf of the country’s 283 municipalities.

Salga conceded that a few municipalities were in financial distress, adding, however, that there were numerous reasons for this, including government departments that were not paying for rates and services.

“Some are in rural and, or declining economies thus having a low revenue base while still expected to deliver services to communities that are, at times, too poor to pay for services.

“Hindered revenue collection is not limited to poor households, as it was found that some institutions, including government departments fail to pay for rates and services. This, coupled with mandates that were not planned for financially, put pressure on already stretched municipal finances,” said Salga.

The establishment of Municipal Public Accounts Committees in each council, would improve the monitoring of local government spending and performance in the same way similar committees have improved their financial standing, said Salga.

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