Durban - Hard-pressed ratepayers owe the eThekwini municipality R1.9 billion in unpaid rates as of June 2012.

Homeowners and business owners are struggling to cope with increases in rates and the cost of living

– with businesses owing R417 million or 21 percent of the total outstanding amount.

Durban Chamber of Commerce CEO Andrew Layman said the impact of last year’s July 1 rates increase might have been a factor in businesses defaulting as they budgeted to meet expenses.

“If the values of their properties were steeply increased, and the rates bill was then unexpectedly large, in some cases more than double what they paid before, they may not have the cash to pay,” he said.

The size of the outstanding debt was “extremely worrying” as the city could not afford to be without this income, even if it was temporary, he said.

“Municipalities also need cash and they, too, can suffer cash-flow difficulties. Unfortunately, we all bear the costs involved in late or non-payment.”

The biggest debtors were government departments, which owed the city R410m. The Ingonyama Trust, which owns 3 million hectares, or 32 percent of all land in the province, owes R285m.

King Goodwill Zwelithini is the chairman of the trust, which consists of traditional land including the major townships of uMlazi, KwaMashu and Inanda. The trust is in a legal dispute with the municipality over whether it is required to pay rates.

Despite these battles, it has emerged that Durban now charges the highest rates in the country – more than Joburg and Cape Town.

City authorities say this is an “unfair comparison”. Municipal revenue deputy head Peet du Plessis said that overall, Durban residents paid far less for municipal services compared to Joburg and Cape Town. The National Treasury had done a comparison of the cost of services in all metros.

In 2012/13, based on “the affordable income group”, costs came to R1 179.40 for an average household bill per month in Durban. In Cape Town, this was R1 329.89 a month and in Joburg residents were paying R1180.48 on average a month.

“The full basket of goods and services is deemed to be a better comparison than just rates alone, as the costs of the various services across municipalities differs,” Du Plessis said. The number of properties differed across municipalities. Joburg had about 950 000 properties, Cape Town had just over 1 million properties and Durban had 509 830 properties.

“Joburg and Cape Town have more properties on their roll than Durban and their average property value is much higher than that of Durban,” he said.

Du Plessis also said Durban had the highest unemployment rate compared to the other two metros, so “our cross-subsidy level is higher”.

Lilian Develing, of the Combined Ratepayers’ Association, questioned how the city had allowed the debt to grow to R1.97bn.

“A lot of people are being overcharged, so the city really needs to recalculate their figures. But if the amount is accurate, the city’s credit control policy should have never allowed that to happen,” she said.

Wakefields estate agents spokeswoman Lesley van Duffelen said there seemed to be no valid reason why Durban’s “rate in the rand” (R0.00914) should be higher than Cape Town’s (R0.005613) or Joburg’s (R0.004).

“Considering that people earn a lot more in Johannesburg and a little more in Cape Town… and that the cost of living is not that much higher, it makes the effect of the rand rate in eThekwini harsher,” she said. - The Mercury