Johannesburg Metro Editor

THE City of Johannesburg has warned against “premature” assumptions that the pending rates review process will increase rates even before research is finalised and the draft rates scale is drawn up.

This statement came amid growing concern about the Property Rates Act, which introduces a rating system based not only on the value of land but also on improvements. The act will make all 284 municipalities operate under the same rules and they will have the same opportunities and increase their revenue.

Johannesburg city manager Mavela Dlamini said residents should engage their local authorities on the process and “their objections will be taken into consideration when the rates are drawn up”. He said the city expected rates to remain largely the same.

But Democratic Alliance council leader Mike Moriarty has expressed concern in the Johannesburg council that the new system will penalise businesses and residents in high-density properties such as flats, where the value of the building is much higher than that of individual houses.

However, Dlamini said the new system would accommodate this to ensure that no one was unfairly penalised. He denied that the new system would be used to increase the city’s income, which stands at R48bn and which has an annual inflation-rate increase.

Government has also given an assurance that the new legislation would not be a means to raise more revenue. “The income will be more or less similar to the present needs of the day,” Dlamini said.

The “rate in the rand” figure, which is 12c per rand value of property in Johannesburg, should generally drop under the new system because of the larger tax base, which would offset increases that came from improvements to properties, he said.

But Moriarty and some property experts argue that residents could end up paying higher rates if the value of their improvements far exceeds the value of their land.

The act is expected to bring sectors into the tax net that were previously exempt from property tax, such as untaxed former township areas and schools, which previously enjoyed a 20% discount. It allows exemption on properties used for religious worship, giving municipalities the discretion to decide.

For Johannesburg residents, the draft rates policy document, which will be based on figures gathered from various agencies such as the Deeds Office and bank estimates, is expected to be completed by March.