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The date for the urgent court challenge to City of Cape Town’s three tariffs linked to property rates, has been set for 17 and 18 September in the Western Cape division of the High Court.
The challenge is brought by the South African Property Owners Association (Sapoa) on behalf of its members and in the public interest.
Sapoa is challenging the city’s cleaning levy as well as the fixed charges for water and sanitation. All three tariffs – which were implemented on 1 July – are linked to property value, which Sapoa contends is unlawful.
It asks the court to declare the tariffs invalid and suspend the order for two months to allow the city to rectify it.
If it is impossible for the city to rectify the three tariffs in isolation and still raise the budgeted amounts from them, the court is asked to set aside the whole budget. This will allow the city to adjust other tariffs so that the budget remains funded.
Would-be friends
According to Ben Groot, director at GVS Law which represents Sapoa, five other entities submitted requests to join the action as friends of the court. They are:
- CapeXit
- Good Party
- Cape Town Collective Ratepayers’ Associations (CTCRA)
- Africa Restoration Alliance (ARA) Party
- #SA1stForum
He says Sapoa has not objected to any of the requests, but the City of Cape Town has not agreed to any of them.
That means that the entities must each appoint legal representatives to bring a formal application and argue in support of their applications in court.
These papers must be submitted to court by Friday, 8 August.
So far, the CTCRA, the Good Party and CapXit have confirmed that they will do so and that their papers are being drafted. Moneyweb has been unable to establish if ARA and #SA1stForum will pursue the matter in court. Such information will be added to the article when received.
A party will only be admitted as a friend of the court if they bring an argument that is not already before court.
Following CTCRA’s application to join the action, chairperson Bas Zuidberg says the city questioned whether the organisation has been formally constituted and whether it would bring any additional arguments or insights over and above those already raised by Sapoa.
Zuidberg says while Sapoa raised the fact that the tariffs will have a wider impact than only on its members (commercial property owners), it only listed the detail regarding commercial property. The CTCRA would give its analysis to the court of the impact of the tariffs on residential property owners who are on a fixed income and cannot pass the cost on to anybody else, like commercial property owners can.
“This is substantial difference for the court to consider,” says Zuidberg.
In its analysis it will show that the city can raise the same amount of revenue without linking the tariffs to property value, which the CTCRA, like Sapoa, contend is unlawful, he adds. He says the association will debunk Mayor Geordin Hill-Lewis’ characterisation of the dispute as rich people complaining about necessary cross-subsidisation of the poor.
“It’s about lawfulness,” says Zuidberg.
Further, he says CTCRA was formally constituted on Monday and has sent its constitution and membership list in response to the city’s concerns.
Brett Herron, secretary-general of the Good Party, says the city’s response to its application to join the action was that the party is represented in council, and had an opportunity to say what it wanted to there.
The party will however submit a formal application on Friday with the same legal arguments as Sapoa, but addressing the impact of the city’s new tariffs on residents. “According to the city’s spin it is a redistributive budget, but that is not supported by evidence,” he says.
Herron says the Good Party would not in principle be against the rich cross-subsidising the poor, but contends that that is not the case in the City of Cape Town.
Jack Miller, member of city council for CapeXit, says its lawyers are busy drafting its formal application, after the city also rejected its initial application to join as a friend of the court.
He says the perspective they want to bring to the matter is that the city must challenge the contribution it gets from the fiscus, rather than increase tariffs.
According to Miller, Cape Town contributes R232 billion per year in taxes but only gets about R5 billion back from the fiscus.
CapeXit argues that the City of Cape Town should fight for a bigger allocation, even if it means taking the national government to court – before it imposes these tariffs on residents.
Sapoa in its papers argues that legislation authorises municipalities to levy four kinds of charges:
- Property rates;
- Surcharges on basic charges;
- Consumption-based charges; and
- Municipal tax, if authorised by national legislation.
It points out that the three tariffs are not based on consumption. It is not a surcharge based on a basic charge and not a municipal tax.
Sapoa considers the tariffs as a form of property rates, as it is linked to property value, but points out that it does not comply with the Property Rates Act.
Click here to read the article on the Moneyweb website.