Republic of South Africa

American Journal of Economics and Sociology, The, Dec, 2000 by Godfrey R. A. Dunkley

* The tax is on both land and improvements rather than solely on land.

* The tax is on rural land only rather than on all land.

* The tax does not replace existing taxes that contribute to unemployment by their effect upon the margin of production.

* The tax is limited to two percent.

At local government level, vast changes are taking place rapidly. At this stage, only a couple of items can be included in this report.

Throughout the country, many of the smaller municipal areas were incorporated into larger cities, and some then subdivided along different boundaries. This has made it virtually impossible to compare city statistics in order to ascertain growth trends. An extra complication is that the Cape Town Valuation Roll is now sixteen years out of date and reflects wildly inaccurate values which vary between some five percent and 50 percent of the actual market value.

A Greater Cape Metropolitan Area was established which brought together thirty-nine former municipal areas with a population of approximately two and a half million people, covering an area approximately 120 kilometers from north to south and 60 kilometers across. It was then subdivided into six municipal areas. Each included a number of totally different valuation rolls that varied vastly, some nearly twenty years out of date, as well as a mixture of different rating structures with different percentages of composite rating and flat rating. Both the complexity and the severity of the situation created an opportunity for introducing the site-value rating system. First the South Peninsula Municipality appointed a Rating Committee under the chairmanship of Councilor W. Stibbe. Information about site-value rating was provided to him by the present writer, and presentations were made by a number of Cape Town planning and rating officials who favored going directly to SVR in order to simplify and update the valua tion rolls. After a few meetings, the Committee recommended that (single) site value rating be introduced in July, 1998. This was then approved by the South Peninsula Council.

This Rating Committee subsequently influenced the Cape Metropolitan Council to resolve in favor of a similar system in October 1996, but three municipalities declined to adopt it at that stage, as they already had mainly updated valuation rolls and did not wish so soon to assume the considerable expense of new ones.

Before site-value rating could be implemented, large numbers of properties had to be revalued and many of the existing valuation rolls updated. Cape Town and two adjoining municipalities, South Peninsula and Blaauwberg, undertook the preparation of new valuation rolls based on site values only. On nearing completion, these new rolls were challenged by landlords on technicalities, some possibly valid. Costly litigation could have resulted. For this reason, coupled with various factors mentioned below, the new rolls were discontinued.

In the meantime, the central government had announced steps to create five mega-cities--Johannesburg, Pretoria, Durban, Cape Town, and Port Elizabeth. New municipal boundaries have been drawn, and rural areas including farming land have been incorporated into these new municipal areas. All will become liable for paying rates. This process is in diverse stages of implementation. Great confusion exists, and strong objections have been voiced. The farming communities are very upset, as most of them have never paid rates, and believe that they will receive little of value in return.