Cape Town Tariffs: Replace City’s “Redistribution” Charade With Super-Tax on High-Value and Second Homes

GOOD Statement by Brett Herron, GOOD Secretary-General:

If Cape Town Mayor Geordin Hill-Lewis is serious about protecting lower-income households from higher tariffs, he must introduce a progressive tariff system that spares the struggling working and lower-middle classes and targets those who can really afford to pay.

When the Cape High Court ruled that the City’s fixed tariff structure was unlawful, Hill-Lewis threw his proverbial toys out of the cot, warning that the only available option was to charge poorer people more. (The City has until Friday to decide whether to lodge an appeal against the full-bench judgement.)

Hill-Lewis is being disingenuous. Like other conservative politicians across the world, he is good at using progressive language, such as the language of redistribution, while at the same time defending the unequal status quo.

Cape Town is among the most unequal cities in the world. It is the City with the highest property values in South Africa, and the highest rental costs, that sits alongside a +800 000-housing backlog.

Cape Town also boasts one of the world’s leading short-term rental markets. In other words, locals can’t afford to buy or rent homes in their own City while those who can afford several homes laugh their way to the bank. It is estimated that 70% of apartments in the inner-city of Cape Town are in the short-term rental pool.

The City’s proposed redistributive tariff exempted properties valued at less than R620 000.

That sounds pretty good until you consider that the average price of a freestanding home in Mitchell’s Plain these days is R750 000 to R1.2 million. Which means the average Mitchell’s Plain homeowner would have been liable for fixed tariffs they simply cannot afford.

This doesn’t just apply to Mitchell’s Plain. Due to increasing property values, there are hundreds of thousands of Capetonians who live in homes they would not be able to afford at today’s prices, who have no spare cash and can’t afford to contribute to the Mayor’s misdirected and unlawful concept of redistribution.

Cape Town could learn from New York, where the Mayor is a former Capetonian. New York property is the most expensive in the US and, like Cape Town, is a tourist mecca with a massive housing shortage.

1. New York’s short-term rental market is among the most regulated in the world in a bid to retain access to as much housing as possible for locals while raising taxes; and
2. To balance its budget this year, New York imposed a super tax on owners of super high-value homes.

Rather than spreading the load to include those who can’t afford to pay more, and calling it redistribution, Hill-Lewis has the option of summoning the courage of his alleged convictions to target those in the wealthiest bracket of Cape Town society, from whence his Party’s funding comes.

At the same time, to show good faith, the City must credit ratepayers’ bills with the tariffs they paid that have been deemed unlawful.

GOOD Manifesto on Affordable Housing: Promoting policies for affordable housing solutions for low-income families.

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