The South African Property Owners’ Association (SAPOA) is pushing ahead with a pivotal initiative to lay bare the current property tax regime in South Africa, with the appointment of Business Enterprise at the University of Pretoria in partnership with specialist consultants Rates Watch (Pty) Ltd.
“The prevailing level of, and the increases seen in property taxes throughout South Africa in recent years continues to be of concern to the commercial and industrial property industry in South Africa,” says SAPOA CEO Neil Gopal.
“For that reason, we are taking a strategic and proactive approach to identifying, collecting and analysing core data on property taxes, so that we can best inform both our members and our efforts as an advocate for the sector.”
The project focuses on generating empirical and credible information on several key questions of interest.
One is the constitutional implications of municipal property tax decisions; another is the consequences of the Rates Act 2004 in ensuring municipalities correctly set property taxes.
SAPOA has also asked the researchers to assess the impact of property rates relative to both municipal funding models and the market-related value of properties.
Best international practice will be examined as part of the scope of work, to set a benchmark for South Africa.
“The key outcome from SAPOA’s perspective is a set of recommendations that can be effectively used to influence policy-makers on issues relating to setting and imposing property taxes,” says Gopal.
Given the gravity of the property tax situation in South Africa, SAPOA is taking a multi-pronged approach to unearthing facts about property-related municipal costs.
In addition to the research project with the University of Pretoria and Rates Watch, SAPOA last month appointed Rates Watch separately to undertake a comprehensive investigation into municipal budgets, as well as the policies and legislation that underpin them.
“The two initiatives dovetail closely and it makes sense to conduct them in parallel,” says Gopal.
“Since the property sector contributes significantly to the rates base in South Africa, we intend to find out everything we can about property taxes and their impact on our sector.”