Some thoughts on withholding rates

The issue of withholding rates is scheduled to be voted on at the coming JBRPA AGM. Since this is a complex issue, I did some research on the subject.

1. More than 200 ratepayers associations have declared disputes with their municipalities and more than 30 are currently withholding rates. The most famous case is Sannieshof.  See http://www.scribd.com/doc/18360694/Towns-in-Dispute-with-Municipalities-South-Africa-April-2009, 
   Sannieshof Facebook page http://www.facebook.com/group.php?gid=94041694787
   
   
2. In most cases, the local residents association declares a dispute with the municipality, sets up a trust fund into which residents pay their rates (but not electricity or water charges), tenders for local small business to take over activities like garbage collection and road repair, while continuing negotiations with the municipality. Individual ratepayers must separately declare a dispute with the municipality, in which case they are entitled to withhold payment until the dispute is resolved. No municipality has taken ratepayers to court yet for non-payment, and are unlikely to do so, according to some legal advice.
   See http://www.sfbresidents.org/2010/08/11/questions-and-answers-re-dispute/
   Municipalities may not stop services to residents who have filed a dispute. See this article from the Joint Advocacy Group in Johburg http://www.facebook.com/notes/joburg-advocacy-group/important-billing-crisis-advice-for-residents/109937019082412
   
   
3. Legal opinion on the issue is divided, although there is common law support for the concept of only paying for services actually received..
   see http://www.nbusa.org/?p=429#more-429 ethics of witholding rates.
   
   
4. There are numerous reasons for declaring a dispute in the Kouga area. These are well summarised here, under the heading Which of the Issues have the KM Addressed?:
   http://www.sfbresidents.org/2010/12/23/minutes-21st-dec-2010/
   and here in more detail http://www.sfbresidents.org/2009/12/14/municipal/
   
   
5. There are several organisations in South Africa that are active in the taxation and rates area. Some references are:
   The Institute for Accountability in Southern Africa  http://www.ifaisa.org/
   Taxpayers foundation of SA  http://tpmsa.org/
   National taxpayers union http://www.nbusa.org/
   SA taxpayers association facebook group http://www.facebook.com/group.php?gid=372830810387
   
   
6. In my opinion, there are pro and cons to this step:
   Pros
   a. Withholding rates may lead to better governance in Kouga and improved services
   b. The prosperity of the area will improve if the facilities are correctly utilised
   c. It may lead to a greater sense of unity amongst residents
   d. Issues such as excessive rates will be addressed, reducing costs for residents
   e. Essential services likely to collapse unless something is done soon
   f. Threat of withholding taxes very effective as a means to improve existing services
   
   Cons
   a. Withholding rates may lead to collapse of services in Kouga, eg, poverty alleviation, health services, social services.
   b.  Residents must take responsibility for essential services – are necessary skills available?
   c. Residents and ratepayers association may become involved in litigation, although unlikely.
   d. Special arrangements need to be made to obtain clearance certificates when selling property.
   e. Administration of trust fund needs to be closely monitored and used appropriately. Don’t replace one corrupt administration with another.
   
   
7. Final thoughts and next steps
1. The governance situation in Kouga is bad and likely to get worse.
2. Things may change, depending on the outcome of the local elections
3. The new administration, whoever it is, must be held to the same standards expected of the old.
4. The JBRPA should get its house in order in the next few months, increase its membership significantly, and become an active force in J Bay.
5. A project to prepare the JBRPA for a possible withholding of rates should be setup. All the necessary research and planning should be done. Affiliations with other residents associations should be improved and experiences shared. The withholding of rates must appear as a CREDIBLE threat to the Kouga administration.
6. The conditions under which a rates withholding dispute may be initiated must be clearly spelt out to the public, the Kouga administration and local government agencies. If these conditions are fulfilled, then preparations for a dispute should be set in motion. An actual rates revolt should be a last step in a series of negotiations.
7. Would I join a  rates dispute? Only if I knew what I was getting into, what the risks were, what the likelihood of success might be, what the worst downsides might be. If specific conditions for improving governance in Kouga are repeatedly violated, then I would feel I had no option but to take decisive action, having exhausted other alternatives.