THE FISCAL AUTONOMY OF SOUTH AFRICAN MUNICIPALITIES TO LEVY RATES: AN APPRAISAL OF City of Johannesburg Metropolitan Municipality v Zibi [2021] ZASCA 97

Abstract

The Constitution of the Republic of South Africa, 1996 protects the fiscal autonomy of local government. Integral to this autonomy, is the original power given to municipalities to impose rates on property. This power is regulated by the Local Government: Municipal Property Rates Act 6 of 2004 (MPRA). In City of Johannesburg Metropolitan Municipality v Zibi (234/2020) [2021] ZASCA 97 (9 July 2021), the Supreme Court of Appeal (SCA) had to decide on whether the City of Johannesburg was entitled to levy a rate in the form of a penalty on residential property for illegal or unauthorised use, without first changing the category of the property on its valuation roll or supplementary roll, from “residential” to “illegal or unauthorised” use and publishing this in the provincial gazette. The majority judgment held that the City’s decision to levy a penalty in respect of the use of the property within its jurisdiction was not ultra vires its constitutional and legislative powers because it had done so as part of a validly adopted property rates policy. On the contrary, the minority judgment came to the conclusion that the City was not empowered under section 8 of the MPRA to determine “illegal use” as a category of rateable property, nor to include such category in its rates policies. The minority judgment held that the action of the City of Johannesburg was illegal. This article appraises the judgments of the SCA in City of Johannesburg Metropolitan Municipality v Zibi. It argues, inter alia, that although the reasoning of the majority judgment was correct, it overlooked the transitional arrangements in section 93B of the MPRA that was introduced by section 35 of the Local Government: Municipal Property Rates Amendment Act 29 of 2014. In addition, it is argued that the position adopted in the minority decision is wrong because it reflects the closed list of ratable properties that municipalities must comply with after 1 July 2022. This overlooked the wide discretionary powers municipalities enjoyed in relation to differentiation and categories of rateable properties as a result of transitional legislative arrangements.