1. MUNICIPAL FISCAL POWERS & FUNCTIONS BILL
PUBLIC HEARINGS, /11

2. INTRODUCTION TOTAL INCOME : R93,7 bn
Very broad and enabling legislation which is welcomed
However, concern is that local government will still not be sharing in an equitable manner in the growth of the economy, particularly from the growth of business
In 2005/2006 the operating budgets of the Metros were funded as follows :
TOTAL INCOME : R93,7 bn
RSC levies and Electricity make up R30,83 bn of the total income (33%)
However, in some municipalities, such as Ethekwini, it makes up 40% of the total income

3. SECTION 4 : AUTHORISATION OF MUNICIPAL TAX
Concerned that the Minister has to approve any new form of tax – this could be restrictive and infringes on the municipality’s constitutional rights
However, the consultation base should be broadened to include organised local government
Alternatively, it is suggested that an independent regulator be created to deal with the approval of municipal taxes
“It should never be that the anger of the poor should be the finger of accusation pointed at all of us because we failed to respond to the cries of the people for food, for shelter, for the dignity of the individual” – Nelson Mandela

4. SECTION 5 : APPLICATION FOR AUTHORISATION
This section is very prescriptive and is an onerous application. There are limitations that will impede on the rights of local government.
My concern is that it will take the Minister 6 months to notify the municipality of his/her intention and another 12 months to prescribe the regulations referred to in s6
 The implication of this is that it could take almost 18 months from the date of application for the municipality to actually implement the municipal tax. This could have major impact in terms of service delivery and by the time the regulation is gazetted, the tariff will have already gone up
 Furthermore, if the regulation is gazetted mid of the financial year, the municipality will have to wait until the beginning of the financial year.
There is no appeal mechanism to review the Minister’s decision

5. SECTION 6 : REGULATIONS - IMPOSITION & ADMINISTRATION OF MUNICIPAL TAX
Again an onerous application, which could be seen as in “control of” rather than oversight role
“Pride in our country is a common bond between us all. It is the essence of our new patriotism. The onus is on us, through hard work, honesty and integrity, to reach for the stars.” – Nelson Mandela

6. SECTION 8 : NORMS & STANDARDS
This section is well in line with the Constitution in particular 8 (1), though 8 (2) create problems. The differentiation is unacceptable and constrains the executive authority of municipalities.
“Success is not measured by what you do compared to what others do, it is measured by what you do with the ability God gave you” – Zig Ziglar

7. SECTION 10 : GENERAL
Regulations will only be reviewed every five years. This is very long; in fact regulations should be reviewed every two years at least.
“Our children are our only hope for the future, but we are their only hope for their present and their future” – Zig Ziglar

8. SECTIONS 11, 12, 13 & 14 :GENERAL
The heading of Section 229 of the Constitution is about Municipal Fiscal Powers and functions and one may say this is all about Powers vested with the Municipalities.
Section 229(2) (b) stipulates the powers of a municipality to impose rates on property surcharges on fees for services provided by or on behalf of the municipality, or other taxes, levies or duties may be regulated by national legislation. As the constitution say may be regulated, this should be left in the hands of the municipal council as it is the one that understands the needs of the community.
The Council is also capable of responsibly exercising their powers by ensuring that they do not materially or unreasonably prejudice national economic policies, economic activities across municipal boundaries, or the national mobility of goods, services, capital or labour. Municipalities are over-regulated which undermines and hamper service delivery.

9. BUSINESS LEVIES/ RSC LEVIES
Concerned at the statement that the RSC and JSB levies “do not meet generally accepted principles of sound taxation”
This will restrict municipalities as we felt that these levies were a good form of taxation as it related to the growth of the economy. Further, we would welcome views on the introduction of a turnover tax that would be administered by SARS
- It is agreed that the collection processes, particularly in district municipalities, were inefficient, however, this could be overcome by SARS administering these levies
- The headcount component of the tax was not appropriate, and accordingly this should be dropped, i.e., only the turnover should remain
- The legislation was outdated given the new Constitution. The new Bill could address this
Would like to clarify whether the equitable share given to all municipalities to replace the RSC levy will still apply

10. RSC LEVIES GROWTH vs GDP GROWTH vs CPIX
AVERAGE
RSC Growth ,5%
CPIX ,8%
GDP Growth ,4%
RSC levy growth greater than CPIX and GDP growth
This is due to the increase in turnover of businesses and the increase in employment

11. CONSULTATION
In future, not only organised local government should be asked for comments, but should at least include metros and major cities.
“We all have two choices : We can make a living or we can design a life” – Jim Rohn

12. CONCLUSION
In order for the municipality to achieve its objects as stipulated in section 152 of the Constitution and in order to play its developmental duties as stipulated in section 153 of the Constitution, the National and Provincial governments should not compromise or impede a municipality’s ability or right to exercise its powers or perform its functions.
“Nothing is really work unless you would rather be doing something else” – James Matthew Barrie

13. THE END
“Are you bored with life? Then throw yourself into some work you believe in with all your heart, live for it, die for it, and you will have what you had thought could never be yours” – Dale Carnegie