LOCAL GOVERNMENT: MUNICPAL PROPERTY RATES ACT, 2004 [ACT No. 6 of 2004]

1. LOCAL GOVERNMENT: MUNICPAL PROPERTY RATES ACT, 2004[ACT No. 6 of 2004] Implications of the Municipal Property Rates Act within rural areas Traditional Leader Summit 29 + 30 MARCH 2010 MPRA - Transitional Leaders Summit - Nov 2008

2. Overview of the presentation • What is the Local Government: Municipal Property Rates Act? • Power of municipalities to levy property rates, • What is property rates used for? • Constitutionally Impermissible Rates, • Rates Policy of municipalities, • Implications of the Municipal Property Rates Act within rural areas, • Closure MPRA - Transitional Leaders Summit - Nov 2008

3. What is the Local Government: Municipal Property rates Act? Section 229(2) of the Constitution gives municipalities the power: • to impose rates on property, surcharges or fees for services provided by or on behalf of the municipality but this powers may – (a) not be exercised in a way that materially and unreasonably prejudices national economic policies, activities, or national mobility of goods, services, labour or capital. (b) be regulated by national legislation MPRA - Transitional Leaders Summit - Nov 2008

4. Power of municipalities to levy property rates • The property rates Act is national legislation that regulates the powers described in the Const, • All property owners are liable for payment of rates, • The definition on properties includes commercial, residential (homes), agriculture, government, etc (All properties), • The Act does make provision for rebates, reductions and exceptions on certain properties, • Also makes provision for the levying of different rates on different categories of properties. MPRA - Transitional Leaders Summit - Nov 2008

5. What is property rates used for? Revenue from property rates is used to fund services that benefit the community as a whole, such as – • Building/installation and maintenance of: - Streets, - Sidewalks, - Street lights, - Storm water drainage. • Operating of clinics, libraries, parks, recreation facilities, cemeteries, etc, • Funding of the administration, • Cost of governance – councillor remuneration, community meetings, etc. But not to be used to subsidise economic and trading services – Electricity, water, refuse removal, sewerage charges MPRA - Transitional Leaders Summit - Nov 2008

6. Constitutionally Impermissible Rates • As already outlined, Sec 229(2) of the Const. not only gives the power to municipalities to levy rates, but it also prohibited a municipality to exercised his powerin a way that materially and unreasonably prejudices national economic policies, activities, or national mobility of goods, services, labour or capital. • The Minister for Provincial and Local Government can regulate municipalities on the rate to be levied on a specific category of properties, • Any sector of the economy may request the Minister to regulate the rates on any specific category of properties where they are of the view that a high rate will effect the economic activities of the sector MPRA - Transitional Leaders Summit - Nov 2008

7. Rates Policy of Municipalities • Section 3 of the Act requires that the council of a municipality must adopt a rates policy consistent to the Act on the levying of rates on rateable property, • It further requires that the policy must: - treat persons liable for rates equitably, - provide the criteria for exemptions, rebates, reductions, etc, - provide the criteria for categorisation of properties, - allow the municipality to promote local, social and economic development, - take into account the effect of rates on the poor. MPRA - Transitional Leaders Summit - Nov 2008

8. Rates Policy of Municipalities cont: • Before a municipality adopts a rates policy, a full community participation process must be followed. • The rates policy must be reviewed annually and any amendments must be followed with a community participation process before adoption by the council of a municipality, • Municipalities must also adopt By-laws to give effect to the implementation of the rates policy. MPRA - Transitional Leaders Summit - Nov 2008

9. Implications of the Municipal Property Rates Act within rural areas Section 17 of the Act regulates municipalities in terms of impermissible rates on properties: • Sec 17(1)(g) stipulates that a municipality may not levy a rate - “on a property belonging to a land reform beneficiary or his or her heirs, provided that this exclusion lapses ten years from the date on which such beneficiary’s title was registered in the office of the Registrar of Deeds” MPRA - Transitional Leaders Summit - Nov 2008

10. Implications of the Municipal Property Rates Act within rural areas cont: Definition ofLand Reform Beneficiary: “(a) Means a person who acquired the property through – (i) the Provision of Land Assistance Act, 1993 [Act No. 126 of 1993] (ii) The Restitution of Land Rights Act, 1994 [Act No. 22 of 1994] (b) holds the property through the Communal Property Associations Act, 1996 [Act No. 28 of 1996] (c) holds or acquires the property in terms of such other land tenure reforms legislation as may be pursuant to Sec 25(6) and (7) of the Const.” MPRA - Transitional Leaders Summit - Nov 2008

11. Implications of the Municipal Property Rates Act within rural areas cont: • Section 21 of the Act provides for the phasing-in of property rates on newly rateable property, • Most of the rural areas in municipalities are newly rateable properties – this includes communal land, • When government has decided what to do with communal land, [CLaRA] we belief that the ten years impermissible rates will then also be applicable from the date of registration with the Registrar of Deeds and thereafter will be phased in. MPRA - Transitional Leaders Summit - Nov 2008

12. THANK YOU QUESTIONS MPRA - Transitional Leaders Summit - Nov 2008