EXPOSING THE FIBS IN CAPE TOWN’S TARIFF AND REVENUE MODEL

GOOD Statement by Sandra Dickson, GOOD City of Cape Town Councillor:

The recent High Court ruling against the City of Cape Town’s property-value-based fixed charges exposed serious weaknesses in the City’s tariff and revenue model when they were found unconstitutional, unlawful and invalid.

The Mayor is yet to announce whether his government will abide by this judgment and how it will deal with the tariffs already collected unlawfully.

In the meantime, an analysis of 4 likely bills under the current Draft Budget, for residential properties valued at R1m, R3m, R5m and R7.5m already shows that if the tariff structure is not adjusted by the City’s leadership, then nearly every ratepaying resident will see an increase in their property rates. Thus, the Mayor’s claim that 60% of ratepayers will not see an increase is dishonest.

Virtually all ratepayers will see an increase in their bills.

That claim was already questionable on the City’s own numbers and clearly illustrated in the 4 examples presented here.

Now the court ruling puts Hill-Lewis under even more pressure.

If the City implements the judgment and loses revenue from unlawful tariff components, it will have to recover that money from somewhere.

One obvious pressure point is the 10.2% reduction in the rate-in-the-rand promised under the current 2026/27 Draft Budget.

If that reduction is removed or reduced to make up for lost revenue:

• More households will pay more; and
• The rates burden shifts even further onto homeowners.

The same uncertainty now hangs over the cleaning charge, which the Court found to be a hidden rates tax.

Hill-Lewis may now have to:

• Redesign the cleaning charge
• Shift that cost into another tariff
• Recover that revenue elsewhere in the bill
• Increase pressure on property rates to close the gap.

In every scenario, someone pays.

The City must raise the revenue required to provide basic services equitably.

However, where the City has over-borrowed to the extent that the revenue demands to service that debt are objectively unaffordable for most residents, the City needs to look internally to cut superfluous projects, costs and waste.

The convoluted tariff scheme of reducing the rate in the Rand for property rates, introducing new property values just three years after the previous general valuation, and pretending city-wide cleaning can be recovered by a tariff rather than covered by rates, was clearly done to massage numbers ahead of an election.

If he persists with this smoke-and-mirrors budget, we will all pay the price for a City that is for the super-rich only.

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