Thobeka Ngema|Published
Businesses and residents are being left in the dark over whether they are effectively subsidising unpaid municipal accounts, with ratepayer representatives demanding greater transparency on how municipalities collect debt, write off arrears, and enforce payment.
They say municipalities should publish detailed figures on collection rates, outstanding debt, write-offs, payment arrangements, and enforcement outcomes, broken down by customer category, to establish who is paying and who is not.
The rate burden and the call for data
Umhlanga Ratepayers & Residents Association (URRA) vice-chairperson and spokesperson Duncan Heafield said that while businesses face significantly higher property rates per rand of valuation than residential properties, this higher charge alone does not prove the extent of residential cross-subsidisation. Determining that requires transparent data on billing, collections, and recoverable arrears across all customer categories.
“URRA’s position is that businesses and paying residents should not become the automatic source of additional revenue whenever collection falls short. The municipality should publish the evidence needed to establish who is being billed, who is paying and where revenue is being lost,” Heafield said.
He added that inter-city comparisons must evaluate full municipal bills and service quality rather than commercial-to-residential ratios alone, as valuations, rebates, tariffs, and extra charges determine true value.
“For Durban, the risk is a damaging cycle: rising costs discourage investment, weaker investment limits growth in the revenue base, and the remaining paying customers face further pressure.”
Heafield said they cannot responsibly claim that enforcement is equal — or quantify how unequal it is — across these three cities without comparable enforcement and collection data. A written policy is not proof of consistent implementation.
“Each municipality should publish collection rates, aged debt, payment arrangements, write-offs and enforcement outcomes separately for residential, commercial and government accounts. Property-rate debt should also be distinguished from electricity, water and other service debt.”
Heafield clarified that fairness requires transparent aid for the indigent, consistent enforcement against non-payers, and credible dispute resolution, rather than selective enforcement targeting easily accessible customers.
“Our central message is simple: Durban cannot build a stronger municipal revenue base by making it progressively harder for businesses to survive and residents to afford their homes,” Heafield said.
“Protecting essential revenue requires a growing economy, dependable services and fair collection. Businesses and residents have a shared interest in a municipality that collects what is properly owed and demonstrates value for every rand spent.”
Enforcement disparities and administrative realities
Independent economist Ulrich Joubert noted that businesses effectively cross-subsidise residential non-payment because they face immediate service disconnections if they fail to settle municipal accounts.
He questioned whether city administrations, particularly in Durban and Johannesburg, maintain up-to-date systems and issue accurate billing across all areas compared to Cape Town, where stronger administration may result in lower cross-subsidisation.
Joubert explained that councils face low returns on infrastructure spending in historically neglected townships compared to other areas.
He highlighted that pre-1994 anti-payment rhetoric created a mindset against paying rates and taxes that persists today.
At the same time, he said townships receive many services (electricity and water), and the poorer section of the population is always free of charge.
“But that money has to come from somewhere. So, there’s a lot of subsidising taking place in any case,” Joubert said.
Why business survival matters for local government
Efficient Group chief economist Dawie Roodt said that, in most cases, local authorities simply would not exist without business.
“They will not exist because of a number of reasons. They employ people, they pay taxes, they pay more taxes, much more than individuals. Without them employing people and without them paying taxes, the local authorities will cease to exist. Business is crucially important,” Roodt explained.
For instance, he said that when starting a business, rates and taxes increase. Instead, they should decrease to encourage economic growth, employment, and tax contributions.
Roodt said that as the primary touchpoint for essential services, local municipalities impact businesses far more than the Minister of Finance. If the local government fails, the entire economy collapses.
“That is perhaps our single biggest challenge in South Africa when you talk about the various authorities, and that is the local authorities that are collapsing. If a business pays taxes, then the business expects the local authority to provide certain services. And as we know, they don’t.”
thobeka.ngema@nationalmg.co.za