Please note that you are using an outdated browser which is not compatible with some elements of the site. We strongly urge you to update to Edge for an optimal browsing experience.

New rates plan tough to implement

08 Jul 2005

There have to be serious doubts about the practicalities of implementing the new Municipal Property Rates Act, which is aimed at creating a standard method of calculating rates in all of the country's 284 municipalities.

So says Gerhard Kotzé , CEO of ERA South Africa, who agrees that the purpose of the Act is "sensible" in that it aims to create a more efficient revenue collection structure and address the imbalances of the past by broadening the tax base.

The basic premise is that rates need to be calculated on the value of a property including any improvements, with the first R15 000 of value being exempt. Many properties such as nature reserves, churches, national parks and botanical gardens will also be exempt but for the first time agricultural land will be drawn into the rates net.

"The legislation brings us into line with practice in other parts of the world and nobody can really quibble with it in principle. Notwithstanding the fact that it will have the effect of increasing rates for some, the payback will supposedly come via improved expenditure on infrastructure.

"But the problem lies with the actual implementation. I seriously question whether the various municipal authorities will be able to cope with property valuations or re-valuations on the scale envisaged by the Act. Currently in Gauteng, for example, it can take a local authority seven or eight months just to evaluate one property for sub-division purposes.

"So how long will it take for municipal valuers to complete the enormous task of assessing all the properties in their jurisdiction? The short answer has to be that it will take years to do so and that in view of the constant flux of sales and purchases in the market, it may never be possible to complete the task. Also, where valuations have been made, they will almost certainly be rapidly out of date, leading to numerous disputes."
The Act became effective this month and is expected to be operational by July next year, with local authorities officially having three years to achieve implementation.

"My view, though, is that even this is far too tight a time frame and that the current - admittedly questionable - rates systems will be in place for a long time to come in many parts of the country," Kotze says.

New rates plan tough to implement

Share

Top Articles

Latest properties for sale in South Africa

Cookie Notice