Posted: Thursday, April 12, 2012
By Ruel
Williamson
It is evident that property rates are meant to be a significant
source of local revenue in South Africa. It was deemed important
enough that the National government drafted and instituted
legislation to outline the rules governing the use and
implementation of a local property rates strategy.
The Municipal Property Rates Act, (Act No. 6 of
2004) hereafter referred to as the MPRA, regulates the power of a
municipality to impose rates on property; to exclude certain
properties from rating in the national interest; to make provision
for municipalities to implement a transparent and fair system of
exemptions, reductions and rebates through rating policies; to make
provision for fair and equitable valuation methods of properties;
to make provision for an objections and appeals process; to amend
the Local Government: Municipal Systems Act, 2000, so as to make
further provision for the serving of documents by municipalities;
to amend or repeal certain legislation; and to provide for matters
connected therewith.
Municipalities need a reliable source of revenue
to provide basic services and perform its functions. Income derived
from property rates are a vital source of revenue for the
municipality. Revenue from property rates is used to fund services
that benefit the community as a whole, rather than individual
households. These services include installing and maintaining
streets, roads, sidewalks, lighting, and storm drain facilities;
and building and operating clinics, parks, recreational facilities
and cemeteries. Revenue from property rates is also used to fund
municipal administration, such as computer equipment, office
supplies, and costs of governance, such as council and community
meetings, which facilitate community participation on issues of
Integrated Development Plans (IDP's) and municipal budgets.
Municipal property rates are set, collected, and
used locally. Revenue from property rates is spent within the
municipality, where the citizens and voters have a voice in
decisions on how the revenue is spent as part of the IDP and budget
processes, which a municipality invites communities to input prior
to municipal council adoption of a budget.
The Constitution of the Republic of South
Africa, (Act No 108 of 1996), entitles municipalities to impose
rates on property in their areas, subject to regulation in terms or
national legislation. The Constitution also enjoins local
government to be developmental in nature, in addressing the service
delivery priorities of the country and promoting the economic and
financial viability of the municipalities, and in general to meet
its obligations in terms of Section 152 of the Constitution of the
Republic of South Africa, 1996.
Local Government requires access to a sufficient
and buoyant source of revenue necessary to fulfill its
developmental responsibilities. Income derived from property rates
is a critical source of revenue for municipalities to achieve their
constitutional objectives, especially in areas that have been
neglected in the past due to racially discriminatory, inadequate or
inappropriate legislation and regulation.
It is essential that municipalities exercise their power to
impose rates within a statutory framework that not only enhances
certainty, uniformity and simplicity across the nation, but also
takes into account historical imbalances and the rates burden of
the poor. The Constitution of the Republic of South Africa confers
on Parliament the power to regulate the exercise by municipalities
of their fiscal powers.
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