There is provision for municipalities to reduce the rates they charge property owners or to exempt them from payment entirely. John Endres reflects on why municipalities should go this route.
When Parliament drafted and adopted the law governing municipal rates – the Municipal Property Rates Act of 2004 – it foresaw a situation where a disaster would impose such hardship on citizens that they would find it difficult to pay their municipal rates and taxes.
The foresight of South African lawmakers is reflected in Section 15 of the Act, which makes provision for municipalities to reduce the rates they charge property owners or to exempt them from payment entirely.
One of the conditions, under which municipalities can do so, is if the property is "situated within an area affected by… a disaster within the meaning of the Disaster Management Act, 2002 or [by] any other serious adverse social or economic conditions".
As every South African knows, it is not just a specific region of South Africa that has been affected by a disaster. The entire country has been in an official State of Disaster for over 400 days, since 15 March 2020, and, as Stats SA points out, "(the) personal, social, and economic impact of Covid-19 is unlike anything experienced by the world in the past 75 years".
The State of Disaster is likely to be extended again in the coming days.
Bridging the gap
Exempting citizens from their rate payments for the duration of the disaster would be a quick way to put money back in consumers' pockets, stimulate demand and get the economy going again. For the poorest households, especially, rebates and exemptions can bridge the gap between actual need and severely limited financial means, helping citizens make the proverbial ends meet.
Exemptions and rebates would also make a significant difference in the fortunes of businesses teetering on the edge of bankruptcy. Consider the many landlords who have lost tenants, be they service, retail or industrial companies, because of the ongoing hardship in the economy. By offering businesses some relief on the rates they pay, municipalities can help preserve going concerns, save jobs, safeguard tax contributions, and stabilise supply chains.
Breaking the cycle
Finally, and perhaps counter-intuitively, exemptions can also help municipalities themselves.
Consider the many individuals and companies so indebted that municipalities who pursue repayment from them will either succeed in bankrupting them or fail to get paid while wasting money in its pursuit. Rebates reduce bad debt and break open this vicious circle of indebtedness.
The Institute of Race Relations (IRR) is approaching the Minister of Cooperative Governance and Traditional Affairs, Nkosazana Dlamini-Zuma, to request her to issue guidance to municipalities to exempt property owners from paying rates for the duration of the State of Disaster.
Residents can also apply to their municipality directly for relief.
Readers can learn more about the IRR's initiative here.
- John Endres is Chief of Staff at the Institute of Race Relations (IRR).
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