In a statement issued late on Thursday, the Department of Co-operative Governance and Traditional Affairs (Cogta) has come out strongly against Joburg Mayor Mpho Falatse, blaming him for the increase in school property rates that could paralyze the city’s education sector.
Read: City of Joburg changes bids on school properties
Moneyweb previously reported that the city abolished the special rate category for educational institutions and provided that public schools would be taxed as “public service” property and private schools as “business/commercial” property.
This meant a six-fold increase in public school fees and a 10-fold increase in private school fees from July 1.
The city offered a 25% discount for private schools, but no relief for public schools. This also applies to early childhood development centers and higher education institutions.
Christa Bockhorst, director of Rates Watch, said at the time that the private school, valued at about 70.5 million rand, which paid just over 12,000 rand a month in the previous financial year, would have to pay more than 126,000 rand a month when is classified as a business. Even if he were to qualify for the 25% discount offered by the city, he would still have to collect nearly R95,000 a month in property rates.
According to Bockhorst’s calculations, the cost of a public school with the same rating would rise from 12,000 rand per month to almost 76,000 rand per month.
Human rights group AfriForum tried to get the city to review the matter, but eventually went to the High Court with an urgent application to review and overturn the city’s decision.
Listed education groups ADvTech and Curro have launched similar programs.
Read: City of Joburg Gets Property Rates Act Wrong – ADvTech
The city said it would oppose the applications, and an agreement was reached between the parties that the matter would be postponed until November. At the same time, the city will refrain from taking any credit control actions against the affected schools.
On Monday, Phalatse released a statement under the headline: “The City of Joburg is taking proactive steps to correct national rates and CoGTA tariffs for affected educational institutions.”
She laid the blame squarely on Cogta, citing earlier changes in legislation and the minister’s refusal to approve the retention of a special category for educational institutions.
“Over the past month, Johannesburg City Hall has dealt with queries, complaints and court cases from stakeholders regarding the Section 8(2) amendments introduced by the National CoGTA. During this time, the Mayor’s Committee and the City, specifically the MMC Finance Department and the Department of Revenue, as well as the Legal and Contracts Department, worked around the clock to find a workable solution that would not unduly penalize ratepayers or put the City under the scrutiny of the wrong side of the law or the Auditor General. “, said Falatse.
“My leadership team and I are passionate about being a caring, business-friendly city. While we have had no choice but to comply with the amendments, we have worked hard to find a solution that is a win-win for everyone in the short term, while we consider a long-term strategy, and we are confident that we have found a solution.”
Falatze announced that the mayor’s committee will report to the council to recommend capping the increase for affected educational institutions at 5% and to apply it from July 1.
“We are working on the process and the finer details to ensure the changes are implemented smoothly,” she said.
Mayoral finance committee member Julie Suddaby has since told Moneyweb that council accounts for affected properties will be credited automatically, without the need to seek help first.
Fallace went on to say that the city has requested a meeting with the parties who filed the lawsuits “to bring a proposal to the table for their clients to consider.”
Cogta in his statement throws the ball right into the city’s court.
“It is important to note that the CoGTA Minister is not empowered to determine the cents in the rand rate that a municipality can charge on categories of rateable properties. Moreover, the Minister has never interfered with the functions of the City of Johannesburg as to what discount (discount), if any, it should give to independent schools, as that is a prerogative solely of the council.
“The issue of setting rates does not depend on the category of property (in terms of section 8 of the Municipal Property Rates Act), but also on the actual tariff determined by the municipal council (in terms of section 14 of the Act) and whether the municipality considers it appropriate to take relief measures under section 15 of the Act’.
“A reading of sections 8, 14 and 15 of the Municipal Property Rates Act together makes it clear that the power to set municipal property rates does not rest with the CoGTA minister but with the municipal council,” Cogta said in a statement.
“The Minister does not establish tariffs for communal property and does not determine whether a particular category of property owners deserves benefits (discounts) or reduced rates in relation to their properties.
“This authority is vested in the municipal council and in this regard the City of Johannesburg has independently determined that the schools in question which do not fall under the category of ‘property owned by public benefit organizations and used for a specific public benefit activity’ should only be granted a 25% discount .”