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Send  Share  RSS  Twitter  12 May 2009

PROPERTY: Business Rejects Rates Increase


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THE Cape Town Regional Chamber of Commerce and Industry has written to the City Council to protest strongly at plans in the Draft Budget to increase rates on commercial property by 15.8 percent, nearly double the increase on residential property.

In the letter Mr Albert Schuitmaker, Executive Director of the Chamber, said the proposal was at odds with the City’s own IDP which looked to business to grow the economy, create jobs and attract investment.

This sharp increase in property rates comes at a time of recession when many businesses are battling to survive and to retain staff. In these circumstances the proposed increase is more likely to result in the shedding of jobs rather than an increase in employment and the alleviation of poverty.

We are concerned that the Council sees the increased taxation of business as an ‘easy option’ for the owners of commercial property no longer have any form of franchise, despite the fact that they contribute nearly half of the City’s rates income.”

Mr Schuitmaker said Business, led by the Chamber and SAPOA, was largely responsible for the restoration of order to the Central Business District after it had been allowed to deteriorate to the point where it was overrun by informal traders and marauding gangs of “car guards”.

Business did this by agreeing to pay an additional levy on top of their normal municipal rates to finance the City Improvement District. The result of the intensive management put in place by the City Partnership was a safe and clean CDB, a reversal of the business migration out of the CBD, massive new investment, a considerable increase in property values and, consequently, an enhanced rates income for the City.”

The Chamber had promoted CID’s in other areas such as Claremont, Wynberg, Athlone and Fish Hoek with great success and there would be more CIDs or Special Rating Areas (SRA’s) in the future.

Businesses throughout the City were paying high rates and then paying again to secure the services that should have been paid for from normal rates income. “Commercial property owners are not getting fair value for their contribution to the City and they have had to resort to CIDS and the extra levy on rates as the only way to secure an acceptable standard of management for the areas that provide the economic lifeblood of the City.

In short we believe that Business is already making a contribution to the City in excess of its fair share and any attempt by the City to ask for more will be seen in an extremely negative light.”

He said the Chamber rejected the City’s argument that the higher rates helped to fill the gap left after the RSC levy was scraped. “This gap is based on what the City estimates the RSC levy would have yielded if it was still in place and if it had escalated in line with inflation and economic growth. In fact, the collection costs have disappeared and the levy has been replaced by the Government. So Business continues to pay the levy through the National Treasury. It would be wrong to ask Business to contribute at national level and again at local level because the City has some kind of projected figure in mind.”

The Chamber warned against other plans to replace the RSC levy. Further business taxes had been suggested and “the Chamber would like to give notice that it will vigorously oppose any such move.

The RSC levy was a bad, regressive tax and any local replacement will be unacceptable. The levy was originally intended to finance infrastructure projects and it should never have been incorporated into the City’s general revenue.

Over the approximately 20 years that the levy was in place Business contributed billions of rands to the City Council. It’s time to say thank you and move on. It is time to do some hard budgeting and not to look for more easy options from disenfranchised commercial property owners,” Mr Schuitmaker said.

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