The High Court in Cape Town (Photo: Shutterstock)
The High Court in Cape Town is expected on Thursday to clarify the Cape Town Metro’s controversial practice of basing the fares for its commercial services on the value of the property in question.
This provoked fierce opposition among consumer groups last year and AfriForum and the South African Association of Property Owners (Sapoa), which represents owners of commercial property, contested its legality in court.
The Cape Town Collective Ratepayers’ Association (CTCRA) and South Africa First Forum joined the suit as friends of the court and the Good Party also intervened.
The case was already heard in December, but the verdict is only now coming. It will be announced hours before the deadline for comments on the metro council’s budget for 2026-27, which takes effect on July 1, expires. This budget once again contains a cleaning charge and fixed rates for water and sanitation which are calculated on the basis of the property value.
If the ruling goes against the metro council, those aspects of the budget are expected to have to be revised.
The ruling can be a guide for other municipalities that want to follow in Cape Town’s footsteps. This year, the Mangaung metro has already stipulated in its tariff policy that from July 1, the rates for garbage removal will be calculated for business, industrial, mining and government properties based on their property value.
It has not yet been finally approved by the council and comments from the public on it have yet to be processed.
Neil Gopal, CEO of Sapoa, says the organization considers this proposal from Mangaung to be against the law. National legislation does not provide that it may be calculated in that way.
“Garbage disposal is not just another tax that is authorized according to national legislation and the finance minister has not approved it,” he says. Municipalities may only levy additional taxes if the minister specifically approves them.
“Indeed, we see this levy on garbage disposal as nothing more than a hidden property tax and we seriously appeal to the metro council not to proceed with this proposal. They should rather go back to the old system of garbage disposal levies,” says Gopal.
Morné Mostert, head of municipal affairs at AfriForum, says the practice of using property value as a basis for calculating rates is contrary to the Act on Local Government: Municipal Systems.
He says there is a good reason why there must be a strong link between the cost of service delivery and the rates. “The legislature specifically wants consumers to be able to limit their costs by using services judiciously. This means that responsible individuals should be able to limit their costs. Linking service fees to property value does not make sense for such services, because it takes away the control that the consumer has over his costs.”
Mostert warns that this practice can lead to an exponential impact on all rates if property value goes up, which does not take into account the physical use of the services.
If the court rules in favor of the Cape Town metro, the picture is bleak for consumers, says Mostert. “Non-performing municipalities will start charging all charges by linking them to property value. The city management in Cape Town can be responsible, but other municipalities do not have the same management structures to be able to do this.”
Mostert says property tax funds a variety of other municipal services whose individual consumption is difficult to measure. However, commercial services such as water, sanitation and garbage disposal’s consumption can be measured and consumers must pay accordingly.
