City of Cape Town tariffs plan may be heading to court

Civil rights group AfriForum is consulting with its lawyers with a view to taking the amended tariff proposals of the City of Cape Town on review, as it is doing in the City of Tshwane.

This comes after the city amended its initial tariff proposals following a flood of objections totalling more than 14 000.

Read:
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Tshwane cleaning tariff may be challenged in court

The new proposals, which are currently open for public comment, fail to address some fundamental issues raised by stakeholders.

Responding to questions from Moneyweb, AfriForum’s head of local government Morné Mostert explained that there will be very little time for the court to deal with an urgent application to stop the implementation of the tariffs, should they ultimately be passed by the Cape Town council.

The deadline for public comment is Friday (13 June).

Thereafter, the council must still process the comments, draft responses, and pass the budget in its current form or with further amendments before 30 June.

The new tariffs will take effect on 1 July.

Objectionable elements

AfriForum has submitted comments to the amendments, but is proactively preparing for a court challenge, should the City of Cape Town persist with the tariffs in their current form.

The organisation objects to:

• The linking of water and sanitation tariffs to property value rather than actual usage, which it argues offends the principles set out in the Local Government: Municipal Systems Act and Municipal Fiscal Powers and Functions Act.
• The lack of a rational basis for linking water tariffs to property value absent any data or clear logical connection to service consumption, infrastructure cost, or fairness. This violates the rule of law and is susceptible to a legality review, it says.
• The restructuring of electricity tariffs without the required recent cost-of-supply study.
• The existence of the ‘city-wide cleaning charge’ as a separate tariff item within the 2025/26 budget structure for waste-related services.

AfriForum says waste removal and city cleansing are two distinct municipal functions.

“Waste removal is a measurable, revenue-generating service provided to individual properties and must be funded exclusively through a ringfenced service tariff,” said Mostert.

“City-wide cleansing, by contrast, is a non-revenue generating public service that includes the cleaning of streets, public areas, and parks.

“This service benefits the broader community and is traditionally funded from general property rates.

“The bundling of city-wide cleansing charges into the tariff structure creates an impermissible cross-subsidisation between a general public function and a targeted user-pay service,” said Mostert.

“This approach lacks transparency, undermines cost-reflectivity, and introduces an unfair and regressive burden on ratepayers.”

Read:
Like Cape Town, Tshwane to introduce mandatory city cleaning tariff
More municipalities could see pushback after Cape Town residents’ petition 

The South African Property Owners Association (Sapoa) earlier welcomed some of the amendments made to the budget proposals following its engagement with Cape  Town Mayor Geordin Hill-Lewis, but added that “the balance of the issues raised in its engagement with the city have not been fully addressed in the amended budget”.

“Of specific concern is the continued above-inflation property rates increases, as well as a basic water and basic sanitary charge linked to property value.”

Regarding the cleaning levy, Sapoa CEO Neil Gopal told Moneyweb “this levy is, in fact, nothing other than a tax”.

He emphasised that it is of general application to all property owners within the city, irrespective of whether they actually make use of the cleaning service or not.

“It is readily apparent that the service to be provided is a general service to the public as a whole, and not to specific property owners.

“This puts the proposed cleaning service in the same category as the provision of streetlights, road maintenance, and the upkeep of parks, all of which are to be funded by property rates, and not by specific charges,” said Gopal.

He said Sapoa’s view is supported by the fact that there are a number of City Improvement Districts (CIDs), also known as internal municipal service districts, operating throughout the city.

“In these CIDs, property owners pay additional property rates (taxes) to fund enhanced and supplementary municipal services. These usually include cleaning services.

“The cleaning services in CIDs are therefore funded by a tax. Furthermore, not all property owners receive the cleaning services from the City of Tshwane.

“In many precincts and developments, property owners are responsible for their own cleaning services.

“In the absence of approval for the City Cleaning Levy by the Minister of Finance, we are therefore constrained to advise that this tariff is indeed a tax which the city is not entitled to raise.

“If it is adopted, the tariff will be ultra vires the city’s powers,” Gopal said.

Property rates income to go up 10%

“We have also noted that the proposed property rates income is set to increase by 10%, which is, of course, more than double the present (and expected) inflation rate,” said Gopal.

“While actual rates tariff will decrease, this increase comes through the substantial increase in property values pursuant to the publication of the latest General Valuation roll.

“Sapoa has in the past engaged with the city with regard to the perceived unsustainable high increases in property rates, especially since the guidelines issued by National Treasury, annexed as Annexure V to the Budget state that above-inflation increases are to be avoided where possible, and specifically motivated if sought.”

AfriForum has, as part of its comments, invited the City of Cape Town to a meeting that could “pave the way for addressing the concerns raised and identifying solutions that benefit all parties”.

It nevertheless warns: “Should the city fail to amend or justify these proposals in line with the applicable legal framework, AfriForum reserves its right to initiate legal proceedings to challenge the budget and tariff structures on grounds of unlawfulness and irrationality.”

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