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Public service organisations must get a better rates deal.

Posted On Thursday, 23 January 2003 02:00 Published by
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The new Property Rates Bill was published at the end of last year for tabling in parliament this year.

The new Property Rates Bill was published at the end of last year for tabling in parliament this year. The constitution gives municipalities the right to levy rates on property, subject to empowering national legislation, which is what the bill as passed will be.

Historically, property used by religious, educational and charitable organisations has been exempt from rates.

In 1994 this general exemption was removed, and only property of religious institutions and independent schools remains exempt. The bill proposes to remove this.

Apart from property not relevant to this article, only public service infrastructure is exempt (transportation and utilities infrastructure such as roads and power lines).

Is this the right way to go? Are charitable, educational and religious organisations not as important to the life of a municipality (and accordingly
to the rates it collects on associated residential properties) as roads, water and power lines?

A municipality has to adopt a rates policy that is equitable in respect of rates, grants in aid and exemptions. It must take into account the effect of rates on the 'poor' (without defining this term) and on welfare and charitable organisations (no reference now to educational or religious organisations).

Exemptions and grants in aid must comply with any national framework that may be prescribed. (There is none at the moment). Each municipality will therefore apply its own policies, and experience has shown that these will vary markedly.

A rates policy may apply to different categories of rateable property. A list of some 13 types of uses is set out as to what may be included. But nowhere in this list is there reference to charitable, educational or religious usage.

Properties with such usages normally involve specialised development, restrictive zoning and title deed conditions. For example, what is a graveyard worth? Donated land often reverts to the donor if the specific usage ceases: how do you value this?

It is to be hoped that strong cases will be brought to the parliamentary portfolio committee in three instances. First, why organisations that are performing public services should not be afforded total exemption as long as they retain their tax-exempt status (which will generally assure that these are 'genuine' organisations).

Second, the need for these organisations to be included in a distinct category for differentiated rates purposes and, lastly, the development of a fair technique of valuation for properties with such specialised usage. - Henry Bennett


  • Henry Bennett is a director of the law firm Cliffe Dekker
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