Chris van Gass

Cape Correspondent

CAPE TOWN — Western Cape premier Ebrahim Rasool has proposed the introduction of a property development levy to enable young and poor families to benefit from the province’s property boom.

Making his state of the province address on Friday, Rasool said subsidies were not enough to keep up with demand for housing in the province.

He said countries such as Ireland, Canada and Malaysia applied similar levies, at a rate of 20% of the value of the development that is paid to the state for dedicated funds to build low-cost housing.

Rasool said tapping into a property boom like Western Cape’s could alleviate the problem.

Rasool’s suggestion appears to be a refinement on a similar levy called for by Housing Minister Lindiwe Sisulu, who suggested that property developers set aside 20% of new developments for low cost housing.

Alan Winde of the Democratic Alliance, said Rasool’s proposal for a special levy was "populist but misleading", given his province’s poor performance on housing delivery.

Winde said that Western Cape was not spending the money that it was allocated, "so it is not clear how levying housing developers will ensure that more low-cost houses get built".

He said of the R712m allocated by government for housing last year — R112m — enough to build 3200 houses — went unspent.

Rasool said he had raised the issue of the levy as a matter of debate in the face of the housing crisis and that he wanted to talk to the private sector about how to create a "sharing mechanism" to assist the poor.

"I believe we will increase inequality, build resentment and suspicion, and we will continue to sit on a powder keg if the poorest of the poor continue to rot in squalor and the richest of the rich have opulence in abundance," he said.

Rasool said that he did not want to drive the suggestion as a "hard economic imperative, but in the spirit of sharing the prosperity of Cape Town".

He said it could "easily take three years" from the time the idea was mooted until treasury approved it.

The premier said issues that needed to be clarified before a levy was launched included the effect it would have on the rate of investment in the province.

The provincial government would have to consult with the national treasury in order not "to do something that is against the interest of the national economy".

Rasool said the province was on the "threshold of prosperity" and that for the second consecutive year provincial growth stood at 5,3%.

In the past two years outsourcing has created 6000 new jobs on the back of R1bn in new investment in the province.

The number of overseas tourists has increased from 800000 in 2000 to 1,5-million in 2004.