Johannesburg - The SA Local Government Association (Salga) is gunning for thousands of defaulters owing municipalities almost R100 billion by introducing a law that would set up an agency, similar to the SA Revenue Service (Sars), to attach people’s salaries (via garnishee orders).
Representatives of Salga told the standing committee on appropriations in Parliament on Friday that the agency would have powers to do what municipalities have failed to do over the years – collect debt.
The local government association would table the bill in Parliament soon.
Salga’s head of the finance working group, Subesh Pillay, told the standing committee that the new law would give the agency teeth, like Sars, to go after defaulters and recoup billions.
The municipal debt has more than doubled in the past five years, rising from R43bn in 2010 to a staggering R93bn in 2015.
Pillay told MPs that Sars has various legislative measures in place to recover debt from taxpayers, including the seizure of properties.
Last year Parliament approved the Tax Administration Act, which gives Sars more powers to conduct searches without warrants.
But Salga said with municipalities they were hamstrung because the law did not allow them to gather information through searches, he said.
“We are thinking about how we can securitise what is owed to municipalities through legislation,” he said.
It was in this context they want to set up this collection agency, to go after defaulting consumers.
The agency, like Sars, would be able to attach salaries of people owing municipalities rates.
He said while people were able to pay their bonds, clothing accounts and school fees, they defaulted on municipal accounts.
The National Treasury told Parliament last week 60 percent of defaulters were home owners.
Government departments owed municipalities 4.5 percent of the total debt, while businesses and other consumers take up the balance of the debt.
Pillay said they did not enjoy similar powers as Sars do to recover the debt. But the new law would give them more powers to attach people’s salaries and recover outstanding amounts in rates.
The local government association wants this matter to be speeded up in Parliament.
Pillay said the debt has continued to rise over the years and there was a need to stabilise it.
“In the instance of collection, I have made the point about the collection agency. Municipalities must take responsibility,” said the chair of the finance working group at Salga. He said people who used municipal services had to pay for them.
MPs must fix the law to enable municipalities to reduce the debt significantly, said Pillay. This was a matter that Salga would engage with MPs once the legislation had been tabled in Parliament.
Pillay would not give time frames for the bill, but said it needed to happen soon.
The Minister of Co-operative Governance and Traditional Affairs, Pravin Gordhan, said this week that a third of municipalities were dysfunctional.
Recently, Gordhan submitted proposals to the Municipal Demarcation Board to reduce the number of municipalities through mergers.
He has proposed the scrapping of 31 poor municipalities, to be incorporated into financially strong municipalities, with a solid tax base.
Political Bureau