Thobeka Ngema|Published
Businesses and paying residents could be shouldering the cost of unpaid municipal accounts, as ratepayer representatives and economists call for greater transparency over debt collection, write-offs and enforcement by local authorities.
The debate centres on whether municipalities are collecting what is owed across residential, commercial and government accounts, and whether businesses face a disproportionate burden when other customers fail to pay.
Umhlanga Ratepayers & Residents Association (URRA) vice-chairperson and spokesperson Duncan Heafield said higher commercial property rates alone did not establish the extent of residential cross-subsidisation. Transparent data on billing, collections and recoverable arrears across all customer categories was needed to determine who was paying and where revenue was being lost.
Ratepayers call for transparent municipal debt figures
“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 comparisons between cities should consider full municipal bills and service quality rather than commercial-to-residential ratios alone, as valuations, rebates, tariffs and additional charges determine the true value received.
Heafield said they could not responsibly claim that enforcement was equal, or quantify how unequal it was, across the three cities without comparable enforcement and collection data. A written policy was 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 said.
He clarified that fairness required transparent aid for indigent households, consistent enforcement against non-payers and credible dispute resolution, rather than selective enforcement targeting customers who were easier to reach.
“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.”
Economists warn of the cost of non-payment
Independent economist Ulrich Joubert said businesses effectively cross-subsidised residential non-payment because they faced immediate service disconnections if they failed to settle municipal accounts.
He questioned whether city administrations, particularly in Durban and Johannesburg, maintained up-to-date systems and issued accurate bills across all areas compared with Cape Town, where stronger administration might result in lower cross-subsidisation.
Joubert said councils faced low returns on infrastructure spending in historically neglected townships compared with other areas.
He also highlighted how anti-payment rhetoric before 1994 had created a mindset against paying rates and taxes that persisted today.
At the same time, he said townships received many services, including electricity and water, while poorer sections of the population received them 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.
Businesses are crucial to municipal survival
Efficient Group chief economist Dawie Roodt said local authorities, in most cases, would not exist without businesses.
“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.
He said that when starting a business, rates and taxes increased, whereas they should decrease to encourage economic growth, employment and tax contributions.
Roodt said local municipalities, as the primary point of contact for essential services, affected businesses far more than the Minister of Finance. If local government failed, the entire economy would collapse.
“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,” Roodt said.