Municipal Property Rates Amendment Bill, 2009 Presentation to the Portfolio Committee on Cooperative Governance and Traditional Affairs 15 September 2009

Outline of Presentation Background Content of the Bill Consultations Review of public comments received Conclusion

Background The Bill as approved by the Cabinet on 12 August 2009, seeks to amend the Municipal Property Rates Act (“the Act”) so as to extend the period of validity of valuation rolls that existed before the commencement of the Act by a further two years. There are seventeen (17) municipalities that failed to implement the Act by the last date of 1 July 2009 by which all municipalities that have the power to levy rates were to have compiled and implemented a valuation roll in terms of the Act. Of these 17, twelve (12) municipalities had levied rates before in terms of old order provincial ordinances that were in effect prior to the commencement of the Act. These 12 municipalities stand to lose significant revenues to the tune of approximately R 410 million.

Section 89 of the Municipal Property Rates Act is hereby amended so as to extend the period of validity of valuation rolls that were in force before the commencement of the Act by two additional years until 30 June Contents of the Bill

The following parties were consulted on the substance of the Bill: – National Treasury – Department of Rural Development and Land Reform – Provincial Departments responsible for Local Government – South African Local Government Association (Salga) Consultations

Comments were received from seven (7) interested parties which are: – City of Cape Town Metropolitan Municipality – Matjhabeng Local Municipality – Makana Local Municipality – Gauteng Department of Local Government and Housing – Institute of Municipal Finance Officers (IMFO) – Transvaal Agricultural Union (TLU) – Mr H. du Toit Review of Public Comments Received (1)

The Bill was supported by the following parties: – Matjhabeng Local Municipality – Makana Local Municipality – Gauteng Department of Local Government and Housing – Institute of Municipal Finance Officers (IMFO) The City of Cape Town Metropolitan Municipality noted the Bill and offered no comments. Review of Public Comments Received (2)

The Transvaal Agricultural Union does not support the Bill for the following reasons: – Its position is that amending the Act does not address the fundamental causes of the inability of municipalities to comply with the provisions of the Act, and that municipalities had ample time within which to comply with the Act. Department’s position: – Although the points raised in the submission may be valid, the comment is not supported because failure to rescue these municipalities may result in municipalities that had rated before losing significant revenues meant to fund the delivery of services to the detriment of communities. Review of Public Comments Received (3)

Mr H. du Toit does not support the Bill for the following reasons: – He is of the view that the implication of amending the Act as proposed is that negligence on the part of municipalities is sanctioned and allowed to continue for two years. – He proposes that as an alternative, that in case of late publication of any valuation roll, a municipality should rebate ratepayers by charging 50 per cent of the rates on the basis of the previous valid valuation roll, until the valuation roll [in terms of the Act] is published.” Department’s position: – The proposal is not supported, particularly the proposal to impose a 50% rebate on all municipalities, because the issue of rebates and the size of rebates is a municipal decision, and should be made by a municipality. National government may not in terms of the Act, dictate the rebate structures of any municipality. – In addition, the Department’s response to the Transvaal Agricultural Union also applies here. Review of Public Comments Received (4)

In conclusion having published the Municipal Property Rates Amendment Bill for public comments, and having assessed all comments received, the Department is of the view that the Bill be considered by the Portfolio Committee on Cooperative Governance and Traditional Affairs in the interest of securing the financial viability of the affected municipalities. Conclusion