The Western Cape High Court heard arguments concerning the City of Cape Town’s fixed tariffs and its decision to link certain fixed charges to property values.

The court was told on Tuesday that the City of Cape Town possesses broad powers, with no restrictions on the impositions it can make.

Judge President Nolwazi Mabindla-Boqwana, as well as presiding judges Judge Andre Le Grange and Judge Katharine Savage, were fastidious as they heard arguments from SAPOA, AfriForum, and the city.

The core of the challenge, brought by SAPOA and AfriForum against the city, revolves around the fixed tariffs and the practice of tying certain fixed charges to property valuations.

In its court application, SAPOA is asking for the three tariffs in the budget, namely the Cleaning Tariff, the Fixed Water Charge, and the Fixed Sanitation Charge be declared unconstitutional and invalid.

SAPOA’s membership currently comprises more than 90% of the country’s commercial and retail property industry, including some of the largest property-owning companies in South Africa.

AfriForum, which launched its own challenge, argues that the city “does not have the power to use the value of a property to determine any fees, surcharges, tariffs, taxes, levies, and duties (hereinafter “tariffs”) other than a rate within the definition of and in terms the Local Government: Municipal Property Rates Act, 6 of 2004 (“the Rates Act”)”.

AfriForum wants to have the budget declared invalid until the end of the 2025/26 financial year, June 30, 2026, “to allow the city to rectify the defects” as it feels that the city does not have the power to use the value of property to do so.

The city has maintained that its fixed charges are not rates but service charges.

Tuesday’s proceedings began with SAPOA and AfriForum, using various case law judgments to substantiate their claim, arguing that as soon as a rate/charge is linked to a value of property, then it is a rate. 

They feel that the city seems to want to find a new definition for the term rate.

SAPOA’s lawyers argued that had the city followed all rules and ticked the boxes, then SAPOA wouldn’t have gone to court, and they argued that it makes a difference whether a levy is charged as a rate or as a service.

SAPOA went on to tackle its arguments for each of the city’s tariffs, and when it came to the cleaning tariff, it explained that as soon as the city “can’t link the cleaning services to any particular user, it should fall under rates”.

They said that their organisation has no difficulty in cross-subsidising the poor, but argued that there is a right way for the city to do that, which is through rates and not fixed service charges.

AfriForum, meanwhile, maintained that the case is about the legality of what the city is doing and what it wants to do. 

It explained that the city must exercise its powers within the legislative framework.

“The core question in this matter is whether the city has exercised only those fiscal powers recognised by the Constitution and national legislation, or whether the impugned charges represent an overreach,” it said in court papers.

It said that its dispute is about the means, not the ends, maintaining that AfriForum does not deny that the city must raise revenue and deliver essential services.

“You can still make the people who can pay, pay, (but) you must just do it lawfully.”

In their papers, they said they accept that ratepayers and users of services should bear a fair and equitable burden, but that the “city must always act within its fiscal powers”.

AfriForum argued that once the city substantially changes its tariff policy, it must amend the by-law.

It is their argument that the imposition of fees and tariffs for services should follow a three-stage process. First, the adoption of a general policy sets out the framework for the determination of fees, charges, and tariffs.

Second, a by-law must be passed, which gives effect to the policy. Third, a council resolution must be taken as it determines the actual content of the tariffs.

Other amici and intervening parties in the matter include the GOOD Party, Cape Town Ratepayers Association, and SA First Forum.

The SA First Forum argued the matter of affordability, stating that tariff increases fail.

They believe that tariff increases bring anxiety to residents, wondering how they will afford the new tariffs, which are found to be totally unaffordable. 

They want the court to consider the issue of affordability, as the applicants haven’t covered this issue accurately. 

They argued that the city has not engaged in meaningful public participation and that it “should go back to the drawing board”.

When the city had its turn, it argued that there is never going to be a policy in place that suits everybody. 

It stated that research shows that there is a correlation between household income and property value, but stressed the point that they were referring to “household income, not personal income”.

It explained that there are specific rebates put into place (for pensioners and household income before R27,000), and that it caters for those affected by gentrification through rebates. 

The city also stressed that there is nothing in the Constitution that says it can’t impose a fixed tariff. The court was a little stunned by the admission when the city stated that it had “wide powers and that there is no restriction to what it can impose”.

The case will resume on Wednesday morning.

theolin.tembo@inl.co.za

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