29/06/2016: Joburg property owners to get massive rebates
The City of Joburg’s improved internal efficiencies, would ensure that property owners in the city receive relief in excess of R1 billion annually in a form of rebates – as it was announced during the budget speech.
The staggering value of the relief which is meant to cushion the consumers, must be one of the biggest single commitments ever done by the municipality in the country.
With consumers burdened by increasing interest rates, the pressure on household disposable income and the sluggish economy, the City has intervened to ensure that it puts money back into the consumers’ pockets in the form of rebates it offers to the struggling customers.
As from 1 July 2016, the City implements its new tariffs in line with its Tariff policy as its starts the 2016/2017 financial year. The new tariffs structure follows a series of consultation meetings across Johannesburg with ratepayers, business forums and community-based organizations who made submissions to the City.
City’s Spokesperson Kgamanyane Maphologela says, some submissions made at the meetings focused largely on issues related to affordability and protection of vulnerable categories.
“We heard the voices of the customers through their submissions they made during the public meetings we held. While we consider the tariffs in the context of being cost-reflective to ensure sustainability of the City, we have taken into account increased internal efficiencies and passed this benefit onto consumers by providing further relief in the final tariffs proposed,” says Maphologela.
Maphologela says the City had to play the balancing act. While on one hand the City has to collect revenue on the other hand it has to be caring particularly towards the vulnerable.
Maphologela says the City’s proposed tariffs demonstrate significant benefits for consumers, in that the proposed tariffs increases are either within the inflation target or below what NERSA, Eskom and Rand Water had proposed.
The proposed average property rates tariff hike is set at 5.9%, which is well below the inflation rate. The proposed average tariff increase for electricity is set at 6.9%, which is much lower than the tariff increase announced by both Eskom and the energy regulator, NERSA. The proposed water and sewerage tariff increase is set at 13.2%, which took into account the carried costs from the Rand Water and that government subsidizes the poor with the 6kl free water per month. For waste removal services, the proposed tariff increase for domestic customers is at 6%, while the business cleaning levy tariff will be 7.25%.
The City has proposed rebates for different property categories which could provide huge relief to property owners come 1 July 2016, when the new policy is implemented. Some of these benefits include:
•The first R200 000 of the value of all residential property is exempted from rating
•The business ratio which had been dropped from 2.8 to 2.6
•A 5% rebate for residential sectional title
•100% rebate for pensioner owners whose gross monthly household income is lower than R8 234 and with property value not more than R2 million
•50% rebate for pensioner owners whose gross monthly income is higher than R8 234 but lower than R14 116, in a property value not more than R2 million
•Pensioners over 70 years who own a house worth R2 million or less receive 100% rebate.
•Child-headed households with property value not exceeding R2 million receive 100% rebate
•People who are on extended social package who are not pensioners and whose property value does not exceed R450 000.
•A 100% rebate for properties registered which have exclusive objective of animal protection
•Housing development schemes for retired persons shall have a maximum 50% rebate
•Properties declared heritage sites in terms of the law shall qualify for 20% rebates
•The new building developments that would take place within the identified Corridors of Corridors of Freedom in line with the approved Strategic Area Frameworks will qualify for a determined rebate provide all requirements are met.
Maphologela says the City would have to look at all the submissions made before coming up with the final policy.
Frequently Asked Questions:
1.What is a tariff?
It’s a price, levy or a charge on services
2.What principle and process the municipality follow to determine tariffs?
Tariffs are set by the City for the services it renders, such as electricity, water and refuse removal. These tariffs are reviewed once a year, with public comment sought on any increases. The annual review process and public input is obtain through: e.g. Rates Policy Review public consultation and Integrated Development Plan (IDP) meetings.
3.What legislation or laws which empower the City to set tariffs?
Section 74 of the Local Government Municipal Systems Act mandates municipal council to adopt and implement a tariff policy. The Constitution of the Republic of South Africa 1996 empowers the Council to impose rates on property. In terms of Section 4 (1) of the Systems Act, the Council may levy rates on property. The Municipal Property Rates Act 6 of 2004 enables the Council to charge rates.
4.How does the City decide how much to charge for services?
Tariffs for the services are informed by increases in bulk purchases rather than inflation. The percentage increases of both Eskom and Rand Water bulk tariffs are above the South African Reserve Bank inflation target range. Given that these tariff increases are determined by external agencies, the impact they have on the municipality’s electricity and water tariffs is largely outside the control of the city.
5.Is the City mindful of the current economic climate and struggling consumers when determining tariffs?
The City is aware that the cost of basket of goods and services has increased despite the fact that we have enjoyed the decrease in petrol prices.
Increasing interest rates. In setting tariffs the City has to balance tensions around affordability, economic conditions, input costs whilst also ensuring that tariffs are cost-reflective, especially for trading services such as water and sanitation, electricity and refuse removal.
6.How does the City shield the poor and ensure that most people can afford to pay when determining tariffs?
The City is a caring city and its tariffs structure is set in a manner that ensures the affordability of services, promotion of access to services, cross-subsidization of the indigent where necessary and feasible.
7.How does the City encourage consumer to use less, save and reduce their bill?
The City has introduced a step tariff for electricity services, which implies that the more electricity consumers’ use, the more they will pay, with a view to reducing electricity consumption and benefiting lower consumption users.
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