Soaring objections impact City of Cape Town’s rates revenue
“The under-recovery is due to the outcome of 2018 rates objections, which had a negative impact on the city’s revenue stream, as well as lower-than-planned exempted properties processed to date,” the report said.
The reason for the under-recovery was “income forgone” - billing reversals, and Financial Intelligence Centre Act (Fica) configuration discrepancies. As at July 31, about R7.97billion was owed to the city for rates and services.
Acting media manager Jyothi Naidoo said: “In every month of the year, the City of Cape Town has 20 billing runs. When it comes to July, being the first month of the new financial year, the billings for July include tariffs and charges of the last month (June), being the past financial year.
“This is based on past valuations, the previous rate-in-the-rand, and the current year from July 1. It is also based on the new general valuations and the new rate-in-the-rand value.”
Naidoo said the income accrued through billing in the first month of the financial year was difficult to estimate as the accrual would not be fully reflective of the rates income received if every household was billed at the end of the month for the full valuation at the new rate-in-the-rand.
“The new cycle started only last month, but one can already see the impact based on the objection process which is currently under way. The city does not plan to make a profit from any revenue stream. A set amount is required to be gathered from rates income for shared services such as fire services, street and traffic lighting and indigent assistance, etc.
“If the required rates income is reached (and there is a surplus), the revenue requirement is reduced in the following year. The city does not collect more income from rates than what is needed to provide shared services and indigent support,” she said
In March, the city’s 2018 general valuation roll was opened for public inspection. It is a value upon which household municipal rates will be calculated until a new roll is issued.@MarvinCharles17