Parliamentary Editor

CAPE TOWN Public service infrastructure belonging to entities such as Telkom, Transnet and Eskom should have an automatic 30% exclusion from the rates levy, Parliament's provincial and local government committee said late yesterday.

Public service entities maintain that because they deliver basic services they should be sympathetically treated and should not simply be left at the mercy of local authorities.

It was also suggested that because public service infrastructure had not been rated in the past, it would fall into the category of newly rateable property in the Property Rates Bill.

This would then ensure that a fouryear phasing-in period applied to the rates on public service infrastructure.

It would also take years for local authorities to complete the valuation, so in some cases the payment of rates by the public service entities would take up to seven years to be effected.

After sitting deep into the night on Wednesday, and again for much of yesterday afternoon, the committee "tentatively" decided that 30% of the value of public service infrastructure would be excluded from rates.

It is hoped that by Tuesday the committee and the public service entities will come to an agreement. This is the last major problem standing in the way of finalising the bill.

Committee chairman Yunus Carrim said the offer of 30% was a tentative one from the committee, but members were confident they were moving in the right direction. He said a clause in the bill would spell out for local authorities exactly how the valuation of public service infrastructure should be done.

One of the possibilities, Carrim said, was that the value of plant and machinery could be excluded from the valuation of the property. This had been done for farmers in that the value of crops on the land would not be taken into account when the valuation of agricultural land was done.

Carrim said that, like farmers, municipalities would have to take the effect of rates on public service entities into account when they went about setting their rates policy.

He also said that the committee had decided that it was "probably true" that if public service infrastructure was rated, the cost was more likely to be passed on to the consumer than if a state department was rated.

There was, however, no guarantee that if they were excluded from paying rates that the benefits would indeed be passed on.

Carrim also noted, however, that many public service entities were increasingly profit oriented, which raised the question of how fair any exclusion from rates was to the companies that competed with them.

He pointed out that SA's cellular phone operators paid rates, but that Telkom did not.

Feb 06 2004 07:22:41:000AM Wyndham Hartley Business Day 1st Edition