SAPOA comment on the City of Cape Town’s proposed drought charge
The City proposed to raise the funding through the imposition of a drought charge. Whilst the proposed charge will affect residential and commercial properties alike, the lower threshold of R50 000 for commercial properties means that the charge will have a broad impact on the industry. SAPOA canvassed many of our members in the Western Cape to gather reactions and sentiment on this imposition by the City and below is a summary of the questions and comments submitted to the City:
- Given that the worsening drought situation had been known for several years, and that significant expense was always going to be incurred in projects to mitigate the situation, how is it that the City in its MTREF budget for 2017/18 seemingly failed to make adequate provision for these projects?
- How did the City not foresee the shortfall in water and sewerage revenue that would result from its own calls for residents to reduce water consumption by 40%?
- Why did the City only start to put in place water supply augmentation schemes in August 2017?
- Given that Cape Town has been declared a water disaster area, SAPOA questioned whether all the available avenues for disaster funding from provincial and national government had been explored. Is it fair to expect the residents and the commercial property industry to foot what seems to be the entire bill for all the water supply-augmentation schemes that have been launched?
- The proposed Drought Charge is an additional tax. SAPOA queried how the City foresaw chargeing such a tax when taxes are only imposed at National level.
- Whilst SAPOA understands and accepts that the supply-augmentation projects will cost money, we feel strongly that recovering the drought charge uniformly according to a property rates valuation gives no recognition to those consumers who have heeded the call to save water.
- The calculation of the drought charge is in no way linked to water consumption in a building. Any charge (if imposed) should be funded by a charge against water consumption and not against the building value.
- The schedule sent to SAPOA stops at R500-million for commercial properties. SAPOA queried the consideration where the property values are above this figure. For buildings approaching R1-billion value, the amount of the drought charge would be exorbitant.
- Looking at the level of the proposed drought charge and comparing this to the loss in water & sewerage revenue which the City claims is responsible for the funding shortfall, SAPOA has noted that the money to be raised by the drought charge seems to be significantly above the revenue loss associated with lower consumption of fresh water and sewerage services.
SAPOA impresses on the City to keep it informed of the next steps and the progress that is being made with regards to the proposal.