Cooperative Governance and Traditional Affairs (CoGTA), has noted with disappointment the misleading media reports on the municipal property rates tariffs as they relate to schools or institutions of learning.
These articles purport that the City of Johannesburg’s municipal property rates tariff increases emanates from direct instruction by the Minister of CoGTA. At the heart of this matter are the following questions:
(1) Who sets municipal property rates, is it the council of a municipality or the Minister for CoGTA?
(2) What are the provisions of the Municipal Property Rates Act that a council of a municipality considers in setting municipal property rates tariffs?
It is important to note that the Minster of CoGTA is not authorised to determine the cent in the Rand rate a municipality may levy on categories of rateable properties. Moreover, the Minister has never interfered with the functions of the City of Johannesburg on what rebate (discount) if any, it should give to independent schools as this is a prerogative solely reserved for Council.
The issue of setting rates is not based on the category of the property (in terms of section 8 of the Municipal Property Rates Act) in question, but also on the actual rate tariff a municipal council determines (in terms of section 14 of the Act) and whether a municipality deems it appropriate to grant relief measures in terms of section 15 of the Act.
Section 8 of the Municipal Property Rates Act requires a municipality to determine a property category for purposes of levying rates. Section 8(2) lists mandatory property categories that a municipality must determine, provided such property category exists within the municipal jurisdiction. Such mandatory property categories include business and commercial properties, properties owned by an organ of state and used for public service purposes; and properties owned by public benefit organisations and used for specified public benefit activities. Section 8(3) states that “In addition to the categories of rateable property determined in terms of subsection (2), a municipality may determine additional categories of rateable property, including vacant land: Provided that, with the exception of vacant land, the determination of such property categories does not circumvent the categories of rateable property that must be determined in terms of subsection (2).”
It is important to contextualise the fact that the City had seven years since 2015 within which to ensure that its categories of rateable properties are in line with section 8 of the Act. Section 14 (1) of the Municipal Property Rates Act states that “A rate is levied by a municipality by resolution passed by the municipal council with a supporting vote of a majority of its members.” Section 14(2)(b) requires the municipal council resolution to “(iii) reflect the cent amount in the Rand rate for each category of property.”
Section 15(1) of the Municipal Property Rates Act states that “A municipality may in terms of criteria set out in its rates policy- (b) grant to a specific category of owners of properties, or to the owners of a specific category of properties, a rebate on or a reduction in the rates payable in respect of their properties.”
Reading sections 8, 14 and 15 of the Municipal Property Rates Act together makes it clear that the authority to set municipal property rates is not with the Minister of CoGTA but is with a municipal council. The Minister does not set the municipal property rates tariffs nor does the Minister determine whether a specific category of owners of properties are worthy of being granted a rebate (discount) or reduction in the rates payable in respect of their properties. These powers are vested in the council of a municipality, and in this regard, the City of Johannesburg has, in its own right, determined that the schools in question do not fall within the category of “properties owned by public benefit organisations and used for specified public benefit activities” must only be granted only 25% rebate.
Should the City have wanted the other schools to pay rates similar to that of “properties owned by public benefit organisations and used for specified public benefit activities”, it should have granted them higher rebates (discount), for example, 75% or higher to bring some equalisation. Only the city can explain why it decided to grant a rebate (discount) of just 25% resulting in the schools that are not public benefit organisations facing higher municipal property rates increases.
Indeed, the Minister of Cooperative Governance did indeed receive an application in terms of section 8(4) of the Municipal Property Rates Act from the City of Johannesburg Metropolitan Municipality regarding a number of categories and sub-categories of rateable properties. It is important to contextualise the fact that the City had seven years within which to ensure that its categories of rateable properties are in line with section 8 of the Act. In terms of section 8(4) of the Act, the Minister is authorised to approve the determination of sub-categories of rateable properties by municipalities provided these do not circumvent or undercut the categories of rateable properties that each municipality must determine in terms of section 8(2) of the Act. To that end, the Minister responded to the City on its proposed sub-categories of rateable properties.
“Educational” was included in the City’s submission because the City needed advice on how to categorise the properties therein. Given that “educational” is not a category of rateable properties in terms of section 8(2) of the Act, the Minister informed the municipality of this fact and advised the municipality to consider including the properties categorised as “educational” in the public service purpose properties category if they conform to the definition of this property category (that is, pre-schools, primary and secondary schools, further education and training colleges) or in the public benefit organisation (PBO) properties category if they comply with the definition of PBO properties.
It is important to restate that Minister did not give instructions to the City on the cent in the Rand rate that the City should levy on these properties in keeping with the principles of the separation of powers.
Enquiries:
Lungi Mtshali
Cell: 082 088 5060
