7 May 2025

Cape Town’s 2025/26 budget is making headlines, purportedly as a transformative step towards infrastructural enhancement and enhanced transparency. However, beneath the veneer of progress lies a disconcerting reality — a shift towards administrative and political coercion rather than democratic consent. The budget, under the guise of development, is actually a veiled attempt at amassing an average 30% increase in property rates through sly tactics disguised as moral leadership.  

Transitioning from participatory governance to revenue extraction, the budget paints a picture of power that compels rather than empowers residents. The Mayor, Geordin Hill-Lewis, uses crisis-inducing language to justify the imminent changes, creating an atmosphere of fear and dependency yo justify the proposed reforms. The authoritarianism embedded in the budget reflects a troubling trend of underinvestment, bloated payrolls, and declining service standards over the years of DA administration, for which the ratepayers of Cape Town, from medium income groupings, are now expected to foot the bill.  

As the City of Cape Town pushes for exorbitant rate hikes and service charge escalations (as a stealth and wealth tax disguised as tariffs), it becomes evident that this budget unfairly penalizes long-standing ratepayers. Properties, irrespective of actual service consumption will bear the brunt of these increases, leading to retroactive financial burdens disguised as “visionary" strategies. Residents in areas like the City Bowl, Atlantic Seaboard and Southern Suburbs face substantial hikes, highlighting the lack of consideration for fixed-income households and the regressive nature of the proposed changes.  

In light of these concerning developments, it is imperative for ratepayers to take a stand against such unjust practices. This is where CBCRA comes into play. The CBCRA, committed to advocating for fair rates and transparent billing, opposes the City of Cape Town’s 2025-26 budget due to the impending property rate hikes and value-based tariffs. By challenging the unjust taxation system and demanding a shift towards consumption-based billing, CBCRA aims to protect the interests of residents and ensure equitable treatment in service charges. The CBCRA stands united with the CapeTown Collective Ratepayers (CRA), a grouping of over 40 ratepayer associations throughout the city, representing tens of thousands of individual ratepayers, who are vehemently opposed to this budget.  

CBCRA's mission aligns perfectly with the need to resist the coercive measures hidden within the city's budget. By joining CBCRA in their fight against the proposed budget, residents can voice their concerns and actively participate in shaping a fairer financial landscape for the community. Together, we can stand against arbitrary rate hikes, demand accountability in budget allocation, and safeguard our neighborhood's from forced property sales driven by unaffordable rates hikes by the City.

For those who believe in fair rates, transparent governance, and community-driven change, it’s time to take action. Learn more about CBCRA’s opposition to the City of Cape Town’s proposed budget for 2025-26 and be a part of the movement for a more just and equitable financial future for all. Join us in advocating for ratepayer rights, challenging value-based tariffs, and promoting service billing reform. Together, we can make a difference and ensure that Camps Bay and Clifton receive the fair treatment they deserve.

Add your objection here: https://cbcra.co.za/participate

SAPOA has taken part in the legislated public participation process embarked on by the City of Cape Town as part of the budgeting process for the 2025/26 municipal financial year, and submitted its written comments on Friday 2 May 2025.

A SAPOA delegation met with the Mayor of Cape Town, Clr Hill-Lewis, and hid executive team on Monday 5 May 2025.

The SAPOA CEO, Mr Neil Goopal, together with the CEO of Spear REIT Ltd, Mr Quintin Rossi, the Equities Property Fund CFO Mrs Laila Razack, Mr Kevin Roman (SAPOA Wester Cape Chair) and SAPOA's legal representative, Mr Albert van Zuyl of GVS Law, met the Mayor and his executive team to discuss its concerns.

The Mayor noted his appreciation to the letter received from SAPOA with its objection to certain aspects of the proposed budget and informed SAPOA that the City is still considering all objections and this process will continue until the end of May 2025. 

The Mayor pointed out that they are currently in the process to obtain legal opinion from senior counsel regarding SAPOA's view on whether the city-wide cleaning levy is a tax or a levy, but asserted that this levy in necessary as the City require funds to maintain / develop the City.

SAPOA set out its concerns which span five specific areas, as follows:

1. The proposed rates increase

The proposed 7.96% increase in property rates (7.97% for commercial/industrial) fas exceeds projected inflation (±4.4%), as indicated by National Treasury MFMA (Municipal Financial Management Act) Circular 129. This increase lacks adequate justification and builds upon years of similar above-inflation increases. While Cape Town's rates randage is among the lowest nationally, high property valuations means actual rates revenue, a figure SAPOA considers unjustified.

SAPOA's position: SAPOA strongly recommends capping the rates increase at 5%, aligned with economic and statutory expectations.

2. The introduction of a city-wide cleaning levy

The City has introduced a uniform city-wide cleaning levy applied across all properties regardless of service usage. This levy constitutes a tax, not a tariff or surcharge, and has not bee authorised under Section 229 of the Constitution of the Municipal Fiscal Powers and Functions Act (MFPFA). The levy is applied regardless of whether the City provides cleaning services to a specific property. In many CIDs and private developments, property owners fund their own cleaning services.

SAPOA's position: SAPOA asserts the levy is unlawful and unconstitutional, and urges its immediate withdrawal.

3. The new basis for calculation fixed water charges, adn the introduction of a basic sewerage charge.

There is a proposed shift from a fixed basic charge based on connection size to one based on property value for both water and sewerage. Section 74(2)(b) of the Municipal Systems Act (MSA) requires service charges to reflect actual usage. Charges based on property value introduces an implicit wealth tax as it is unrelated to actual service usage. This approach removes incentives for resource efficiency and penalizes property owners already investing in sustainability measures (e.g., solar, rainwater harvesting). Additional fixed charges passed through to tenants increase total occupancy cost. Evidence from SAPOA members suggests that elevated costs are already negatively impacting lease renewals and driving disinvestment.

SAPOA’s position: SAPOA urges a return to connection-size-based fixed charges to maintain fairness, proportionality, and economic viability.

4. The proposed electricity charges

These charges are discriminatory towards commercial property owners. While the City advertises a modest 2% average increase, large commercial users face 16% hikes, while small users receive a 2% decrease. There is no clear rationale provided for this different treatment. The cross-subsidisation mechanism lacks transparency and predictability. Commercial property owners purchase in bulk and resell to tenants at cost, as per NERSA guidelines. This differential increase leads to unrecoverable costs, thereby distorting market dynamics and eroding investor confidence.

SAPOA’s position: SAPOA calls for equitable, transparent tariff adjustments that do not unfairly penalizes large users

5. The City’s innovative tariff calculator

On the City’s website currently, a calculator is available for residential property owners only. Commercial property owners, faced with a raft of new tariffs, new methods of calculating tariffs, and significant increases in tariffs, are simply unable to assess how these changes will impact their financial position. As a result, they are deprived of the opportunity to meaningfully take part in the public participation process. The MFMA mandates public participation and emphasises that this requires meaningful engagement, not procedural formality.

SAPOA’s position: SAPOA requests urgent development and release of a commercial tariff calculator to ensure fair access to information.

SAPOA has furthermore pointed out that the City’s budget remains highly technical and inaccessible to the general public. Furthermore, the shift from a usage-based basic tariff to a property value-based charging system penalizes owners with higher value properties whilst undermining the City’s own green and sustainability goals. The City is, in effect, introducing nothing other than a wealth tax on perceived ‘rich’ property owners, many of whom in actual fact indicated that they will be unable to afford the proposed increases. 

Mr Quintin Rossi suggested that, rather than increasing property rates and tariffs, the City ought to fund infrastructure development.

This may be done by issuing development and infrastructure bonds in the open market. The SAPOA CRO noted that the City has one of the best credit ratings of all municipalities across the African continent, and that it should leverage this position in order to grant relief to over-burdened property owners.

The SAPOA CEO thanked the Mayor for the opportunity to constructively engage with the City, noting that the meeting included a robust by respectful discussion, and assured the City of the continued support of SAPOA. He warned, however that this important constituency should not be ignored, as continuous perceived unreasonable increases may lead the businesses disinvesting in the City.

1 May 2025

The City Manager,  
2025-2026 Budget City of Cape Town  
Pvt Bag X9181 Cape Town  8000  
Per: Budget.Comments@capetown.gov.za

Introduction

The budget that has been proposed clearly states that it is of a pro-poor, pro-development nature, which will be cross-subsidised by the perceived more wealthy property owners of the city.

Much of its apparent basis is in a reported directive by the State Treasury, which requires Local Authorities to establish stand-alone cost centres, such as municipal cleaning which was always (according to the City) included in the rates charges for individual properties.

The perceived low increase in the cost of electricity supply has been much heralded by the Mayor and his team, as evidence of good policy and administration.

The budget relies on using property valuations as a basis for the supply of basic services, rather than consumption.

Although there is no directive which requires a local authority to work within the current rate of inflation (CPI), this budget doesn’t seem to attempt to achieve this rate, which, in reality, financially governs most of the citizens of the metropole.

The CBCRA will comment on the above and then refer to other relevant issues.

Overview

Whereas the ratepayers of this area are sympathetic to any budget which attempts to relieve the plight of the (non-defined) poor, it cannot simply over-tax purportedly wealthy individuals on uncertain grounds, such as property value – which is a very blunt instrument with which to establish an individual’s ability to subsidise City spending.

It harks back to the fable of killing the goose who lays the golden egg, which is an apt metaphor for what this budget will actually achieve.

This appears to be a very socialist-leaning budget, taxing the “rich” to sponsor the “poor”. The merits of that, in itself, is debatable but of more importance, there do not appear to be plans anywhere in the City, let alone this budget, which deal with how this “poor problem” will ever be resolved.
It is common cause that if Cape Town is attractive to the “poor” (this term is used by the City and remains undefined and is only used in this context – and begrudgingly), then this will lead to their numbers simply swelling and the ratepayers of the City having to keep facing impossible hikes in rates into the future.

The City appears to have no plan for this and should heed the words of the late Margaret Thatcher, who commented that the problem with Socialism is that you eventually run out of other people’s money to spend.

The City’s use of a Treasury directive to transparently identify, and charge for, specific service items appears to be disingenuous. It claims that the cleaning tariff has been ordered from up on high and that it is merely fulfilling its duty. Maybe so but then the budget should have this item properly quantified and deducted from the current rates amount. And this amount should be subject to the proposed, almost 8% increase.

In effect, the cleaning charge is now a double tax, with an absurd increasing value based on a property valuation.

The CBCRA also notes that various other I&AP’s have raised the anomalies created by the tariffs, where graphs clearly indicate that percentage increases are not progressive and that sometimes, slightly lesser-valued properties attract a greater percentage increase over more highly-valued ones. This cannot be the intention of the budget and is discriminatory in itself.

Electricity

The issue of the purported savings on electricity charges in the budget is, for most ratepayer income groupings, simply a red herring.

Firstly, the fanfare around the reduction to just over 2% is very limited in application. Many ratepayers will be paying over 35% additionally to their rates bill, even if they are very conservative with their electricity usage.

The converse of this is that the reduction is self-defeating: The Authorities continue to urge the public to save electricity, yet make it more affordable, at the expense of higher-value properties.
This is unacceptable at any level.

The cost of electricity should be pegged at a sustainable rate and usage, on a sliding scale and be the determining factor in actual charges. In its current form, it is merely a stealth wealth-tax on availability and could be legally flawed.

A further implication of this is that for those ratepayers who installed solar/PV systems, at great cost, to assist the City reduce its load requirement, now find themselves penalised for having invested in those systems.

Legal

It would appear as if s74 of the Municipal Systems Act (32/2000) is applicable to any comment on the budget:

•    S74(2)(b) requires that the amount that individual users pay for services should generally be in proportion to their use of that service.
•    S74(d) requires that tariffs must reflect the costs reasonably associated with rendering the service.

Clearly, using property valuation based tariffs is at odds with these basic requirements and renders the budget susceptible to review and setting aside.

S74(3) permits a tariff policy to differentiate between different categories of users, as long as the differentiation does not amount to unfair discrimination.

By using property values as the basis for calculating varying tariffs, an individual – who bought property that has increased in value but remains on a modest income – is now faced with a rates increase of potentially over 30%, which might well be unaffordable.

The City has no right to force that individual to have to sell the property merely to survive. This obviously also applies to retired persons, who often live off fixed pensions.

Further, the general non-use of consumption based charges unfairly discriminates against an individual, who lives alone, in favour of a lesser valued property which houses any number of inhabitants with concomitant higher consumption.

The use of property valuation-based tariffs, in the main, as opposed to a consumption-based approach is both illogical and legally questionable.

City Improvement District (CID)

Due to the City being incapable, or unwilling, to offer services compatible with the rates it currently charges in the area, the ratepayers of Camps Bay were forced to establish a CID to protect the area from the increasing “crime and grime”.

This has come at a very high cost to the ratepayers, who now find that they will be subject to an additional effective wealth tax of potentially over 30%, over and above the CID costs. It is referred to as a wealth tax as it will be an extra charge on the rates bill without any effective increase in service.

The training and deployment of more Law Enforcement officers is of no help to this area, as it has already made that investment privately. That said, the promised extra 5 LE officers, if they ever appear, are coming at an enormous cost to this area, given that no other additional services will be offered by the City.

Thus, with the CPI at about 3 to 4%, the area of Camps Bay will be subject to rates bill increases of between 25% and 38%. The cleaning tariff alone will generate close to R45m per annum.
This amount is clearly not service related and is simply a wealth tax, which the City may not levy.

The tariffs on water, sanitation and electricity are not included in the above calculation and it is abundantly clear that the new tariffs are unjustified and certainly not fair and equitable as required by law.

It must be noted that the City is largely in favour of the creation of CID’s, for obvious reasons.
This budget will do nothing to assist that cause, as there will be ratepayer resistance to any further costs imposed upon them.

Affordability

As referred to previously, there are many individual ratepayers in Camps Bay – and the City – who are (semi-)asset rich and cash poor. This includes people on fixed incomes, retirees and others whose incomes are not linked to inflation. And there are many.

The City is very efficient at revaluing properties on the 3-4 year cycle and applying above-inflation increases to the rates charged. Many have had to make great sacrifices to remain in family homes or homes that were purchased prior to the substantial property price increases.

To now be faced with rates increases of ten times (or more) the inflation rate is completely insensitive on the part of the City.

If the City wishes to pursue this socialist agenda, then people caught in the middle of this issue, who cannot afford the increases and might well have to sell their houses, are also deserving of this apparent largesse on the part of the City.

The City has no legal right to formulate its charges so as to make life unaffordable for individual ratepayers.

Sustainability

The City has clearly ignored the teachings of Henry Hazlitt, the American journalist, economist and philosopher.

His warning of not being only focussed on the immediate, short-term effects of economic policy, or on special interests groups is not apparent in this budget. This budget is short-term and based on catering to one group only. The longer term issue of overtaxing the middle income ratepayer, who bears the brunt of the City’s ambitious budget, is simply ignored.

It also fails to address the burgeoning grouping who cannot pay for services but are encouraged by the City’s service provision – at the cost of others.

This is a case where the subsidy to one is a tax to another and is clearly not sustainable.

Cutting the cloth

The diverse demands on a modern city are not underestimated by the CBCRA.

However, grand schemes are simply unaffordable and the City needs to prioritise its spending.
The City has become a very large bureaucracy, which is not particularly efficient.

Planning applications, for example, can take over a year to process even though the regulatory period is often only a few months. Efficient handling of planning applications can be the life-blood of a city.

The City continues to dump 5m litres of raw sewerage in the bay of Camps Bay every day!
There is no apparent budget to stop this destruction of the marine environment – just money set aside for “think tanks” to deny the problem and obfuscate the issue.

All of the eminent scientists in this field have repeatedly warned of this disaster unfolding before our eyes but the City remains supine, other than attacking the clear, unambiguous science.

However, the City has recovered tens of millions of rand in sewage treatment, whilst operating an inefficient, 1960’s designed dinosaur marine outfall plant that is effectively obsolete. And it now wants to up the charge to residents by a huge increase in tariffs.

Similarly, the City trumpets the huge investment in the Potsdam Wastewater Treatment Plant, which is, admittedly, very necessary.

However, this is the same administration that for years denied that there was a problem in the first place.
If only there had been proper prioritising and budgeting at the time, then the Milnerton lagoon wouldn’t be the barren cesspool that it has become.

Few will forget the lock down of March 2020 – and the loss of jobs, opportunities and the severe financial strain to the general population. Many will also remember how the City paid itself a 6% pay hike at that very time.

The City needs concentrate on efforts to minimise costs, inefficiencies, inflated salaries and over-staffing.

It is common cause that City employees are renumerated at a much higher rate than their colleagues in the private sector. This is not sustainable in the long run, especially given the additional high infrastructural cost of this employment.

Added to this, the City tends to use external professional and contractors to do a large part of its work. Great savings could be made here, rather than over-taxing the already burdened ratepayer.
 

Recommendations

The City needs to totally review this budget, with a view to:

•    Establishing the true needs and requirements of the people of Cape Town.
•    Planning for a sustainable future, especially vis-à-vis the influx of people unable to pay for services.
•    Ensuring that consumption is the driver of charges and not tariffs.
•    Consumption costs should be on an incremental scale that increase with usage.
•    The City needs to increase its efficiency and address its enormous staff wage bill.
•    The City should be addressing the plight of people being taxed out of their homes.

Kind regards