City faces big rates hit

2014-10-30 00:00

THE Msunduzi Municipality is to join in action to challenge an amendment to the Municipal Property Rates Act that could deplete the local rates coffers by R62 million a year.

The amendment makes provision for the government to pay less rates for schools, hospitals, clinics, police stations and other state buildings.

Councillors yesterday baulked at the thought of this becoming a possibility and its devastating effect on the city’s finances.

Bill Lambert said Msunduzi should speak to other provincial capitals as they housed the most government buildings and would be seriously affected.

Municipal manager Mxolisi Nkosi told council that eThekwini Municipality was already considering challenging the amendment in court, and had invited Msunduzi to be part of the process.

The provincial Co-operative Governance Department is also concerned about the effect on municipalities. Spokesperson Lennox Mabaso said it was not a straightforward matter and there were ongoing discussions on the issue. He cited the example of the Education Department paying huge amounts on rates for non-fee paying schools, as opposed to buying textbooks.

Nkosi said the amendment requires municipalities to create a category for public service properties including hospitals, clinics, schools, pre-schools, colleges, libraries and archives, police stations, correctional facilities and courts. He believes the purpose of the creation of a new category is the imposition of lower rates for these properties, similar to provisions for agricultural properties, and properties owned by NGOs.

Nkosi said it is not known when the amendments would come into effect, but they were expecting that it would happen by beginning of the next financial year.

His team estimated that the city stood to lose R62 884 975. “Note that these are minimum losses and with the inclusion of the Edendale schools, hospitals, colleges and other affected properties, this will have a devastating effect on the city’s budget,” he said.

This income would have to be sourced from other ratepayers and additional income sources.

Nkosi said eThekwini is considering challenging the amendment on the basis that it is unconstitutional, and Msunduzi has accepted the call to join the action.

Mayor Chris Ndlela said the challenge to the amendment had to be supported. However, he warned councillors not to have high expectations because the amendment had been passed. “We are coming in at the end of the process.”

Co-operative Governance MEC Nomusa Dube-Ncube said that municipalities are generally battling with revenue collection and these new categories of exemptions were likely to add to their woes. She said the new exemptions would have to be managed creatively.


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