Cape Town accepts court ruling on rates-linked tariffs

The City of Cape Town announced on 22 May that it will accept the recent court ruling that declared and set aside its property rates-linked levies and fixed charges and will as a result make several adjustments to its draft budget for 2026/27.

These amendments, aimed at protecting poor and middle-income consumers, will be published for public comment on 27 May, in time for the implementation of the new budget on 1 July.

The South African Property Owners’ Association (Sapoa), that brought the matter to court, has welcomed the announcement, which came on the same day as the deadline for applications for leave to appeal.

“We are glad to see that the City has decided to abide by the court’s decision, and that it has decided not to waste further taxpayer’s funds in pursuing fruitless appeals,” said Sapoa CEO Neil Gopal.

Read:
Cape Town budget triggers fresh clash over household bills
Cape Town trims rates, caps tariff hikes in latest budget
Cape Town defends N2 wall and property rates recalibration
Date set for court showdown over Cape Town tariffs

Sapoa has recently warned the Mangaung metro to take note of the high court ruling in the Cape Town case and refrain from implementing the rates-linked tariffs incorporated in its draft budget for the coming financial year. If not, it will take this matter to court as well, it warned.

Ruling threatens cross-subsidies – mayor

ADVERTISEMENT

CONTINUE READING BELOW

Cape Town mayor Geordin Hill-Lewis however sticks to his argument that the main impact of the judgment is “to limit the ability of the City – and all municipalities – to cross-subsidise to protect lower- and middle-income households”.

He said: “We have done our utmost to mitigate this effect. To protect lower- and middle-income households from the impact of this court ruling, we propose a further raising of the rates-free rebate to the first R620 000 of property value, up from R450 000, for residential properties under R8 million. All indigent benefits will also apply up to R620 000 residential property value.

Read: Cape Town rates: ‘Pay back the money, Geordin!’

“This will reduce property rates for many households in the lower- and middle-value bands to mitigate the rise in fixed water and sanitation charges they will face because of the court ruling.

“While we adjust for the impact of this ruling, we remain concerned about its implications for the ability of municipalities to equitably cross-subsidise in utility tariffs in the South African social context. We will engage the National Treasury and Co-operative Governance departments nationally to seek regulatory clarity on available options for municipalities to equitably cross-subsidise lower- and middle-income households,” he said.

Hill-Lewis said the new budget proposals do not include any cuts to Cape Town’s essential infrastructure projects, like pipe replacements, better sanitation and public transport.

Read: Court rules Cape Town value-based tariffs and cleaning levy unlawful

ADVERTISEMENT:

CONTINUE READING BELOW

The proposed amendments to the draft budget include:

City-wide cleaning costs move back into property rates: This will remove the city-wide cleaning charge as a standalone item on bills and increase property rates for residential customers – changing the -10.2% reduction tabled in March. Commercial property rates will also increase while electricity unit costs will reduce due to the phased reduction of the surcharge contribution to city-wide cleaning. Residential electricity tariffs remain unchanged as these customers no longer contribute to city-wide cleaning in this way.
Fixed water and sanitation charges revert to water meter connection size: This was the method before the use of property value bands. The impact of the court ruling means that higher-value properties will pay less fixed charges while lower-value properties will pay more than they do currently. The City has tried to buffer this impact by consolidating the fixed tariff charged for all meter sizes up to 22mm, and shifting costs to higher consumption users compared to the March tabled budget through increases to the step tariffs above 10.5kl consumption.

Hill-Lewis emphasised that the ruling’s effect is only prospective and applicable from 1 July onwards. It does not require any refunds for the unlawful levies and charges charged in the current financial year.

Read: Sapoa warns Mangaung: Don’t link tariffs to property value

Gopal said Sapoa notes the City’s undertaking to publish a new draft budget for public comment on 27 May 2026, and will consider such draft budget in detail.

“We will carefully study the new draft budget, and will submit comment where necessary,” Gopal said.

He further urged all other municipalities in the country to refrain from introducing tariffs linked to property values. “Sapoa is currently engaging the Mangaung Municipality on precisely this issue, and we sincerely hope that Mangaung will pay heed to these calls.”

#Cape #Town #accepts #court #ruling #rateslinked #tariffs