IRR calls for property rates and taxes rebate under State of Disaster
10 May 2021
Never in living memory has the case for applying a rebate on property rates and taxes been more urgent.
Disaster management legislation has long anticipated the potential need to rebate payments that would otherwise go to municipal government in the event of a disaster that both hampers service delivery and causes extraordinary economic dislocation.
South Africa has been in an official State of Disaster since 15 March 2020, and, as Stats SA points out, “(the) personal, social, and economic impact of COVID-19 is unlike anything experienced by the world in the past 75 years”.
No silver shovel will dig South Africa out of this hole, but the IRR’s proposal will restore precious resources to points of most urgent need. Rebates on property rates and taxes will put cash back in citizens’ hands and save livelihoods.
The benefits are three-fold.
One, for households, especially the poorest households, rebates can bridge the gap between real need and severely limited financial means, helping citizens make the proverbial ends meet.
Two, for businesses that have not yet suffered bankruptcy under the year-long State of Disaster, rebates can help preserve going concerns, saving jobs, safeguarding tax contributions and stabilising supply chains.
Three, for municipalities that struggle to keep accounts, collect debts, and prudently manage resources, this will reduce bad debts while directly boosting the livelihoods of those the municipalities are intended to serve. This concern lights up when one considers private entities, either individuals or companies, so indebted that municipalities who pursue repayment from them will either succeed in bankrupting them or fail to get payment while wasting money in its pursuit. Rebates break open this vicious circle of indebtedness.
According to Treasury’s February 2020 Budget Review, in the previous financial year over 80% of municipalities failed to spend their operating and specific-purpose grant budgets. After Covid-19 things got much worse, as “municipalities spent only R41.2 billion or 59.9 per cent of the adjusted budget of R68.8 billion” on capital expenditure and a further R9.7 billion unspent on specific-purpose grants.
Moreover, Treasury indicates that municipal revenue subsequently increased by 12.6% while expenditure only increased by 8.8% during 2020/21 (presumably), suggesting many billions more collected and unspent during the Disaster.
“For millions, rebating that money now is not a nice to have, it’s a need to have”, says Gabriel Crouse, Head of Campaigns at the IRR.
Issued by Gabriel Crouse, IRR Head of Campaigns, 10 May 2021
