The Supreme Court of Appeal has upheld a Cape High Court decision that permits councils to levy rates as a charge for services, the Cape Times reported recently.

In a front-page report, the newspaper said that the court’s dismissal had ended a three-year legal battle by the Rates Action Group (RAG) to stop the council from linking service charges to the market value of property.

RAG represents 13 ratepayers’ associations.

The case opens the door for municipalities to levy rates for services such as sewerage and refuse removal.

RAG vice-chairperson Des White told the newspaper that he felt the judgment was fair, but they were “disappointed” that their appeal had failed.

He said several of RAG's objections raised in the Cape High Court case were not heard in the appeal.

RAG objected to the rate levies that, depending on property values, substantially increase the cost of sewerage and waste removal.

White said it was middle-class property owners who would be hardest hit by the rates charges.

While the city had an obligation to first pass a bylaw before imposing a levy charge, “but judgment was given on sewerage and refuse removal being charged as a rate only, not as a tariff”. Evans explained that the need for a bylaw only applied to tariffs.

The Supreme Court found legislation does not preclude the charging of a rate for services.

The city first imposed a uniform method of charging for sewerage and refuse removal in 2002, based on estimated consumption and a basic charge subject to a rebate based on the value of property. When the city’s leaders changed at the end of 2002, the funding of services was reviewed to allow for the subsidisation of households unable to afford basic service charges.

The removal of a cap on charges for sewerage and refuse removal and the levying of property-value related charges, raised the cost of these services, prompting ratepayers to seek legal action against the city. Three years later, the city has been given the legal green light to levy property-related rates, the newspaper said.

City legal adviser Richard Wootton is quoted as saying that because the levy was rate-based, the charges paid by wealthier property owners could be used to subsidise services in informal settlements.

“We have a mandate to provide services, even if people cannot afford them,” he told the newspaper. He said the charges would not be used to fund other services in the city.

Judge Carol Lewis said: “There is no limitation ... in any part of the Local Government Municipal Systems Act, on the uses to which rates may be put nor on the number of rates that may be charged by a municipality.”

This story was originally published in the Cape Times on 29 November 2005.

Source: Independent Online