COSATU Submission on the Property Rates Bill Submitted to the Department of Provincial and Local Government, 18 April 2001

Introduction

COSATU welcomes the opportunity to make input on the Property Rates Bill, hereafter The Bill. COSATU and its affiliate, SAMWU, represent most organised workers working in the local government sector. The Bill has significant implications for the ability of local government to generate income and to facilitate an equitable distribution of resources. A rates policy should be consistent with the objectives of facilitating sustainable economic development and provision of basic services to the poor, in line with Integrated Development Plans.

The Bill should be understood within the vision and goals of developmental local government. Developmental Local Government seeks to use its own resources, authority and capacity to implement development programmes that serve the needs of the poor and the working class. It intervenes in the economy and society to achieve its objectives. State intervention is intended to ensure that that the poor have basic services, job opportunities and transformation of apartheid geography. Apartheid Planning was oriented towards maintaining socio-economic ad spatial segregation. Infrastructure provision, including the property market, was geared towards cross-subsidisation of the poor.

The main challenge facing a democratic local government is to implement policies that ensure redress and equitable distribution of resources, and enhances integrated land use planning. There should be a coherent linkage between recreational, residential and industrial development. Property management should be used to enhance eradication of urban sprawl and poverty. The Property Rates Bill serves as an important legislative tool that can be used to advance such objectives.

Areas of Support

Phasing in of Rates

COSATU supports the thrust of section 9 (1) of the Bill, which indicates that a municipality may, subject to subsection (3), phase in, over a period not exceeding three financial years a rate levied by it on certain property or a category of property that -

1. was previously not subject to a rate
2. was previously exempted or excluded from a rate
3. was previously granted a rate on a rate
4. is newly included in the municipal area by way of a municipal boundary adjustment
5. shows an extraordinary increase in value between previous valuation roll and current valuation roll.

We further concur that a procedure dealing with this provision should be outlined in the regulations. We also welcome the provision made in relation to the owner who is a land reform beneficiary. Section 10 (3) seems to be a drafting error. If it is not, we propose that it should be tightened, as follows:

" a rate levied on new rateable property or on property of which the owner is a land reform beneficiary [may be ] must not be more than the rate levied on similar property or category of property in the municipality, if any".

There are no grounds that justify charging of high levies to land reform beneficiaries. In contrast, the land reform beneficiaries may require concessions to facilitate their integration in mainstream economic activity.

Rates Policy

COSATU supports the overall thrust underpinning the formulation and implementation of the rates policy. We believe that this policy should be oriented towards promotion of equity and facilitate a sustainable local economic development. We support the Bill’s provision that a rates policy must, amongst others, take into account the effect of rates on the poor and allow the municipality to promote local social and economic development. However, we are concerned that the Bill does not make a provision for stakeholder participation in the formulation and review of a rates policy. We are therefore proposing the following provision to be included as Section 13 (e):

" A municipality should consult the communities, residents and ratepayers when it develops and review a rates policy".

Appointment of Municipal Valuer

We support the Bill’s provision encouraging municipalities to share resources and personnel required to perform property valuation. We further concur that a municipality should appoint a person having a proper skills and relevant qualifications due to the technical nature of valuation. A clear distinction between political and functional responsibilities should be made. We believe a councillor should not be appointed as a valuer. Municipal officials, rather than councillors, are preferred to fulfil valuation responsibilities on behalf of a municipality. We therefore propose that section 27(1)(b) should be reformulated as follows:

" a municipal valuer must not be a municipal councillor".

We also accept that a municipality may use special valuation measures to resolve prevailing institutional and logistical constraints.

Section 35 (1) indicates a municipality may apply to the MEC for local government in the province for approval to value a property by special valuation where -

1. there is insufficient information on which to base market value,
2. the market is inadequately developed or distorted
3. property and tenure rights are obscure or confused
4. the cost of a non-special valuation is likely to equal or exceed the revenue yield
5. there is no material municipal service delivery, or the owner of the property provides acceptable municipal services to residents or occupiers of the property.

(2) a special valuation may be carried out on the basis of-.

1. self-valuation by affidavit
2. negotiation in the case of prescribed industrial, communal, agricultural or forestry property, or
3. valuation, other than by way of market value according to generally recognised valuation practice and method.

COSATU believes that communities, ratepayers associations and workers should be informed about this process and therefore recommend the following provision:

Section 35 (3) should read as follows:

"a council must publish the terms and conditions of the MEC approval and allow public representation"

Areas of Concern

Establishment of a Special Rating District

We support the main thrust of the Bill. The Bill provides coherent measures that enhance democratisation of municipalities. It ensures that the legacy of apartheid property rates is substituted with redistributive property rates. However, we are concerned that a special rating district is likely to enforce disparity between high income and low income areas within municipalities. Section 6 (1) of the Bill indicates that a municipality may -

1. define an area within the municipality as a special rating district, and
2. levy an additional rate on property in that district for the purpose of funding improvements exclusively in that district.

A municipality should have standard rates applicable in all areas. The Bill’s provision for a common rates policy and a special rating district is likely to lead to a parallel property rates regime within a municipality.

Levying of rates in areas under jurisdiction of traditional authorities

We acknowledge that traditional ownership of land complicates levying of rates in rural areas. However, it is problematic to suspend the proposals on the matter until traditional leaders are consulted. This is not necessary because that the entire Bill itself is subjected to consultation.

It is an imperative for the Department to provide leadership. We further believe that other stakeholders, for example SALGA and Labour Movement, should be consulted.

Monitoring Valuation Quality

COSATU supports that the minister must investigate and provide a public report on the effectiveness, consistency and application of municipal valuations for rates purposes provided that clear objectives and guidelines are prescribed for the report. We believe this provision will ensure that there is transparency and uniform in terms of the application of property rates amongst municipalities. We are proposing that the Report should be put before NEDLAC and parliament for discussions. Both NEDLAC and Parliament should have powers to make recommendations to the Minister.

Miscellaneous Matters

The Bill states that the minister may make regulations not inconsistent with this Act. It should also be stipulated that the regulations should be consistent with the Local Government Municipal Systems Act, 2000. COSATU believes the Minister should consult with SALGA or organised local government when making the regulations. Furthermore, the Minister should provide interested parties with an opportunity to make submissions before the promulgation of regulations. To facilitate stakeholder input, the Minister should release the draft regulations and provide a reasonable time for stakeholders to make submissions.

Conclusion

COSATU supports the overall thrust of the Bill. However, we have raised specific recommendations that can ensure that property rates bill is used effectively to address the legacy of apartheid planning, accelerate infrastructure provision and delivery of basic services, and creation of integrated land use planning. Principles of Equity, Sustainability and Redress should be central tenets of the Bill. We further believe that the provisions dealing with community and stakeholder participation in the formulation and implementation of property rates policy should be strengthened.




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