Understanding the municipal tax on property

Not many members of the public know much about the mechanics of tax that property owners have to pay to their municipalities.

They simply accept it is part of their responsibilities.

In reality the public has some say relating to this type of tax. The question is, how should they exercise this right.

The municipal taxation system is based on the Municipal Property Rates Act No 6 of 2004.

This Act provides for the municipality to adopt a rates policy which has to be reviewed annually, but must allow for and ensure public participation in the finalisation of the policy.

This means the municipality must inform the public that the document is available for inspection through notices on public notice boards, on the municipal website and advertisements in the media.

Failure to comply makes the policy invalid.

The municipality has to adopt by-laws to give effect to its rates policy.

It is an important document which all ratepayers should familiarise themselves with.

Rates are based on the valuation of properties, and for this purpose municipalities are expected to have a valuation of all properties in the municipal area undertaken by a qualified property valuer every five years.

Remember that the value of your property greatly determines the rates that you will have to pay.

The valuer compiles a valuation roll which is submitted to the municipal manager, who must then publish a notice in the Provincial Gazette that the roll is open for inspection.

Each property owner should also receive a notice of the determined value of his/her property by post.

Within 30 days after the valuation roll is open for inspection, a property owner may submit an objection to the municipal manager against his/her property valuation.

A response from the valuer is then awaited.

If not satisfied with the valuer’s response, the owner can lodge an appeal to the Valuation Appeals Court.

With the valuation roll available, the municipality’s council must then decide - according to its rates policy - what rates should apply to the different categories of properties.

Broadly speaking, the categories could be residential, business, industrial, farming, rural land and so on.

That is provided for in the rates policy and normally different cents in the rand apply for the different categories of properties.

The municipal tax the property owners pay is thus dependent on the value of properties and the applicable rates charged by the municipality.

A decision on this is normally taken by the municipality’s council when it prepares its budget in March every year for the next financial year.

Ratepayers, for their own benefit, should take a keen interest in the whole process.

In this week’s article on municipal management, Prof LOUIS DE CLERCQ points out the importance of ratepayers understanding the process of property tax determination