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Some pain, small gains in Johannesburg property rates

The proposed Johannesburg tariffs set to come into effect on July 1 come with good and bad news.

The good news is that prepaid and conventional electricity charges should drop by 5.2 percent for consumption up to 1 000kWh, but fixed costs such as network and service charges will increase by 28.4 percent for single-phase and 22 percent for three-phase customers.

More good news is that the six-month review of electricity usage, which determines inclining rates, is to be scrapped, meaning all charges start at zero each month as opposed to average increases if consumption is up on a regular basis.

This caused huge unhappiness in June, when prepaid users suddenly found themselves being charged on an increased-usage scale.

There is also good news for business and commercial property owners, as well as business sectional title units, as property rates are reduced by 9.7 percent. However, this will be counteracted by a new valuation of properties, effective from July 1.

For homes, there has been an increase of the entry level of exemption from rates from R150 000 to R200 000. This is the first time that an adjustment

Thas been made since 2008/9. This means that the first R200 000 value of the property will not be taxed.

Another small but welcome concession is a 5.2 percent reduction in residential agricultural homeowner rates. This sector has faced huge increases since it was decided to increase their rates from agricultural to residential in 2010, when about 5 000 Joburg smallholding property owners were slapped with R43 million in backdated rates bills after their properties were rerated from agricultural holdings to residential properties.

Pensioner rebates are up from R1.5m to R2m and the income entry level is up from R5 300 to R6 000.

DA spokesman for infrastructure services and environment in the City of Johannesburg, Denis Hunt, said electricity increases were unconfirmed, but some good parts were preliminary, as the true effects of the new Eskom increases had still to be worked out.

"City Power predicts a revenue increase of 8 percent. Overall increases could be steep because, for the first time, the City of Johannesburg has decided to increase tariffs as usual."

Hunt said he welcomed the introduction of inclining block tariffs. The restructuring was intended to encourage reduced consumption and a fairer structure, he said.

While this had to be welcomed, customers "who appreciate the benefits of electricity are likely to be paying more, and above inflation. That can't be good for the economy. We do not think that a net increase above the inflation rate should be the case," Hunt said.

A 5.3 percent rate increase might normally be considered as fair. "However, this is also the year in which the new property valuations come into effect, and this is expected to yield an increase of property values by probably, on average, between 10 and 30 percent for each household or property.

"So the householder is likely to see an increase on this account on top of the 5.3 percent. In some years previous to this, the city did not increase the rates in the revaluation year. Why not this year?" he wondered.

The council stressed that the rates increases were only proposals at this stage and residents and businesses would have an opportunity to lodge objections against these proposed hikes.
The revenue department spokesman, Stan Maphologela, said public meetings would be held from today until April 24 at peoples' centres for residents to make their inputs. Residents are encouraged to attend.


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