Pro­pos­als to in­crease mu­nic­i­pal rev­enues

Re­port ad­vises Par­lia­ment on ways for lo­cal gov­ern­ments to raise their own in­come


PARK­ING lots, bill­boards and ho­tel beds could be taxed if pro­pos­als to help in­crease mu­nic­i­pal rev­enues, con­tained in a re­port by the Fi­nan­cial and Fis­cal Com­mis­sion, are even­tu­ally adopted.

The com­mis­sion, which ad­vises Par­lia­ment, pro­vin­cial leg­is­la­tures, and or­gan­ised lo­cal gov­ern­ment on spend­ing and in­come, re­cently re­leased a tech­ni­cal re­port in which it pro­posed new ways for lo­cal gov­ern­ments to raise their own in­come.

The sug­ges­tions come as data from a March 2020 sur­vey by Sta­tis­tics South Africa (Stats SA) showed that lo­cal gov­ern­ment in­creased spend­ing by 12.2% over the past year, driven largely by in­creased spend­ing on em­ployee costs.

Ac­cord­ing to Statis­ti­cian Gen­eral Risenga Maluleke: “On the rev­enue side, mu­nic­i­pal­i­ties re­ceived or gen­er­ated R114.9 bil­lion in the quar­ter that ended in March 2020. This rep­re­sents a rise of R19.8 bil­lion (or 20.8%) from the R95.1 bil­lion recorded in the quar­ter ended March 2019.

“South Africa’s 257 mu­nic­i­pal­i­ties spent R96.8 bil­lion in the quar­ter that ended in March 2020 on op­er­a­tional costs, up from R86.3 bil­lion in the quar­ter ended March 2019. This ex­cludes cap­i­tal spend­ing.”

The lat­est Quar­terly fi­nan­cial sta­tis­tics of mu­nic­i­pal­i­ties re­port shows that the big­gest con­trib­u­tors to the R10.6 bil­lion rise were em­ployee costs (up R4.6 bil­lion), “other” ex­pen­di­ture (up R2.6 bil­lion) and gen­eral ex­penses (up R1.7 bil­lion).

Break­ing it down by type of mu­nic­i­pal­ity, the sur­vey showed: “Metropoli­tan coun­cils were the big­gest con­trib­u­tors to em­ployee costs, ac­count­ing for 59.1% of the R30.3 bil­lion. The 205 lo­cal mu­nic­i­pal­i­ties con­trib­uted just over a third (33.5%) and the 44 dis­trict coun­cils con­trib­uted 7.4% to to­tal em­ployee costs.

“Elec­tric­ity pur­chases was the sec­ond big­gest ex­pen­di­ture item for lo­cal gov­ern­ment, con­tribut­ing 18.7% of to­tal spend­ing. Mu­nic­i­pal­i­ties buy elec­tric­ity in bulk and then re­sell the power to homes and busi­nesses.

“Con­tracted ser­vices was the third big­gest item (8.5%), fol­lowed by gen­eral ex­penses (7.6%) and de­pre­ci­a­tion (6.2%),” the sur­vey showed.

On the is­sue of smarter spend­ing by mu­nic­i­pal­i­ties, Con­sult­ing En­gi­neers South Africa (CESA) chief ex­ec­u­tive Chris Camp­bell said: “CESA as­sists and ad­vises mu­nic­i­pal­i­ties on sound and ef­fec­tive project pro­cure­ment, plan­ning and im­ple­men­ta­tion pro­cesses.”

Camp­bell added: “In one case, CESA as­sisted the City of Cape Town by pro­vid­ing ob­jec­tive ad­vice in terms of the En­gi­neer­ing Coun­cil of South Africa (ECSA) fee guide­lines, that re­sulted in the am­i­ca­ble set­tle­ment of a fee dis­pute.

“The is­sue had arisen be­tween the City and a mem­ber firm of con­sult­ing en­gi­neers, where the fees charged ap­peared ex­ces­sive for a rel­a­tively mi­nor project within the Gugulethu Ceme­tery,” said Camp­bell.

“If we can ad­vise more mu­nic­i­pal­i­ties on such is­sues, it would go a long way in im­prov­ing the man­age­ment of pub­lic fi­nances.”

South Africa’s 257 mu­nic­i­pal­i­ties spent R96.8 bil­lion


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