LEGISLATION MPRA PAGE 37 MUNICIPAL PROPERTY RATES ACT Unlawful Discrimination in the Imposing of Rates and Taxes for Members of residential Estates An owner of immovable property in an There is a strong argument that estate is obliged to become a member this constitutes double taxation of of the homeowners’ association (HOA) members in estates. Having already as the governing body. Members paid for the services they use as The Local Government: Municipal are obliged to pay levies to the provided for by the estates, they HOA for services provided to them also have to pay the local council by the HOA. These services are for the same services, which it does similar to those that a local council not actually provide. Property Rates Act empowers a local council to levy rates on immovable property within its jurisdiction. This is done by identifying the categories of property that a particular local council wishes to levy, and then selecting which properties should be allowed exemption from rates and taxes and, most importantly, which qualify for rebates. In terms of the Act, this power needs to be exercised on a fair and equitable basis. The determination of the rates policy of a local council is an annual occurrence and must be approved at a council meeting, subject to a public participation procedure. Rates and taxes are imposed in order to enable a local council to cover its running costs and achieve its objects. All owners of immovable properties are obliged to pay rates and taxes. This discussion focuses on the rates and taxes paid by members of residential estates to a local council where the governing bodies of these entities raise, finance and maintain most of the township services. The question is whether the legislation constitutes a fair and equitable legal scenario for owners of immovable property in these estates. provides to immovable properties within its jurisdiction, such as security, The formulation and imposition of electricity, water and sewerage, a rates policy is a discretionary including reticulation. exercise by a local council, and courts of law are not readily inclined Nationally, in most instances, a to interfere with decisions of a comparison between residential local council. Active and collective immovable properties in an estate and involvement by HOA members in those in the town area of the local the public participation process that council indicates that the same rates establishes the rates policy may, and taxes are payable and therefore however, persuade a court of law the same rebates allowed. to intervene. A local council simply applies the To conclude, local council is legally category of “residential property”, obliged to levy different rates for having taken care to do away with the different categories of property, and previous category of “privately owned this must be done fairly and equitably, township” to avoid an argument taking into account the socio-economic regarding additional rebates for conditions within its jurisdiction and immovable property within an estate. the legislative framework. Estates are advised to be proactive and, where As estates already provide for their own possible, collectively tackle the public services to their members via levies participation process in terms of the raised, there is apparent discrimination, rates policy procedure, in order to because the imposition of rates and pave the way for a more equitable taxes on a flat basis of “residential and fair contribution. properties” by local councils results in an unfair and inequitable legal situation AJ van Rensburg for members of an HOA, especially VRB Attorneys where local councils do not provide these services to property owners in the estates at all.