Many homeowners will have been bewildered to open their utility bills this week, only to see a giddying rise in the rates charged by their municipalities.
After all, since first being told of the planned hike in the valuations of their properties months ago, thousands have lodged objections. Yet the municipalities, displaying an almost admirable nonchalance, ignored these objections, and sent out the bills anyway.
If it seems like a localised municipal issue, it’s anything but. Soaring rates bills sit at the sharp end of anger with delinquent municipalities which can’t be bothered to keep their traffic lights operating, their roads drivable or their lights on. It also fuels the silent tax revolt as wealthier residents (who can pay higher rates) abandon dysfunctional towns or cities — such as Joburg — in favour of those doing better in municipal rankings.
A survey by the Organisation Undoing Tax Abuse (Outa), which has solicited more than 1,000 responses so far from Joburgers, revealed that the average increase in home valuations is 44% — even though actual property values have risen just 8.8% (or 1.8% a year) since the last valuation in 2018, according to experts Lightstone.
Outa CEO Wayne Duvenage’s property value was hiked by 74% — far above the value provided by Lightstone.
“Something has to give,” he tells the FM. “You’ve got a broken metro struggling for funds, thinking it can just squeeze the taxpayer for more. Those buying a R2m home can easily find themselves hit with municipal bills of R8,000 a month, which is half your bond repayment costs. This cannot be sustainable.”
Outa’s Julius Kleynhans says the survey suggests many valuations are untethered from reality, given the below-inflation increase in property prices recently.
“We’re not just getting complaints from Joburg, it’s also coming from municipalities in KwaZulu-Natal, the Eastern Cape and the Northern Cape about the increase in property valuations wherever a new valuation roll is published,” he says.
In Joburg, the city has put new values on 934,652 properties, and received objections on 42,053 of those. In a press release last week, the city claimed it had “finalised 13,000 objections” and plans to have resolved all of them by October.
Kleynhans is sceptical. “Of the 1,000 respondents to our survey, the city had responded to about five,” he says.
With the sort of deft EQ we’ve come to expect from the government, the city’s director of communications, Kgamanyane Maphologela, told residents “to remember they have an obligation to continue paying their property rates while objections are being considered”.
This isn’t good enough for Bowmans partner Heather Irvine, whose own property value was hiked 35%. “Presumably this increases revenues until appeals are determined [which may be] years from now. Outrageous, especially given the level of the increases and the steep decline in property prices in our crumbling city,” she says.
Still, it’s not altogether surprising, as municipalities need the money, partly to pay their exorbitant salary bills and, in the case of Joburg, R690m in “bonuses” last year.
A fact which, for obvious reasons, they like to keep under their hat is that when they bill you for services (such as water or electricity) they’re not simply recovering costs; they’re adding on a hefty mark-up to boost their own bottom line.
Municipalities are desperate, so they’re trying to get money wherever they can
— Julius Kleynhans
But with Eskom hardly able to keep the lights on, this has left a black hole in municipal accounts. In April, Tshwane mayor Cilliers Brink bemoaned the fact that “Eskom load-shedding is causing billions in losses as electricity revenue is forgone and damage is done to infrastructure”.
Says Kleynhans: “Municipalities are desperate, so they’re trying to get money wherever they can. But the risk of these exorbitant rate hikes is that they kill the golden goose as people just can’t afford to pay. Municipal managers aren’t feeling this squeeze at all — they haven’t had to let go of staff because they couldn’t afford to pay them — so they have no idea what’s happening.”
It’s a philosophical schism too. Some municipal officials see what they collect as their due “toll”, rather than compensation for services. When residents pay crushing rates bills, yet precious little of this is allocated to fixing infrastructure, resentment builds and people search for ways to avoid paying.
Or worse: the bills you bust a gut to pay end up fuelling the half-witted pipe dreams of municipal officials who’d struggle to follow the plot of The Real Housewives of Gqeberha.
Last week, Gauteng finance MEC Jacob Mamabolo said the provincial government had blown R4.1m on a due diligence report on starting a state bank and pharmaceutical company.
“The due diligence report clears the legal hurdles and provides Gauteng with a strong legal framework towards establishing a state-owned bank,” he said.
What’s the bet that the report ignored the existing state-owned bank, Postbank, which has been in business since 1884, has R8bn in deposits and has applied for a full banking licence? But then it’s not the greatest reference, since Postbank’s irregular expenditure rose by R118m last year and it’s part of the insolvent South African Post Office, which burnt R1.04bn in cash last year.
That the decision on the state bank now moves to Gauteng premier Panyaza Lesufi — who sanctioned the pointless R431m “school sanitation” campaign during Covid — will no doubt leave you brimming with confidence.
What this example does illustrate, however, is that most government officials don’t see any thread connecting the taxes citizens pay, including rates, with how this money is spent. A drunk who’s won an all-expenses-paid trip to their local Solly Kramer’s would behave with more self-respect and inherent restraint.
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