Bloemfontein has spoken: A ratespayers strike is not a protected course in itself

South African municipal authorities are in a terrible state and residents, rates-payers (many of whom are residents) and businesses operating within particular municipalities have developed hostility towards paying monies which are perceived to be or are maladministered.

Ultimately the residents and ratespayers of the municipality within which Kroonstad finds itself formed an association which like many other residents and ratespayers associations embarked on a rates strike. One of the striking members, a Ms Rademan, found that the municipality had terminated her electricity supply even though she had paid her electricity bill (it seems this is a postpaid account). Subsequently Ms Rademan (presumably with the support of some form of the association) approached the magistrates court to compel the reconnection of her electricity. The case has moved through the High Court to the Supreme Court of Appeal. The Supreme Court of Appeal ruled last week Thursday (1st December) and effectively confirmed both the reasoning and the finding of the Bloemfontein High Court which set aside a decision by the magistrate for the Kroonstad district which gave Ms Rademan reprieve. An advantage of the manner in which this case has been handled is that we have two good judgments, one in English and one in Afrikaans. Unfortunately for Ms Rademan she is finding herself with costs from three courts and these costs do grow.

The judgment which bears the reference Rademan v Moqhaka Municipality & others (173/11) [2011] ZASCA 244 (01 December 2011) is a judgment which any person considering withholding monies from the municipality should consider. The reasoning of the Supreme Court of Appeal is crisp and its findings above any real criticism when regard is had to the relevant statutory provisions. Of course there is always the possibility of a Constitutional Court challenge on the basis that the legislation is unconstitutional.

I don’t believe that the Constitutional Court will find the relevant provisions of the Municipal Systems Act unconstitutional for two reasons: Firstly the Constitution does not contain any provisions requiring meaningful representation before taxation or that the government failing in critical duties may justify certain steps - in so far as this may be viewed as a flaw in the Constitution itself I align myself for fairly complex reasons with the view, in so far as certain political interests advocate the inclusion of such a provision in order to enhance “accountability” I do not. Secondly the Constitutional Court has already in Pretoria City Council v Walker 1998 (2) SA 363 (CC) placed its flag on the mask against a dissent into anarchy. A feature strongly endorsed by the Rademan decision is the fact that municipal rates are “part of the civic and contractual responsibilities” of ratespayers and that “for a municipality to be able to properly and efficiently

One area of the law which this case does not address and which is relevant to Kouga ratespayers is whether a ratespayer must pay the rates assessed by the municipality according to inflated property values of whether they may pay rates on a lower valuation of the property if the second valuation is in order – this is a major issue due to the assessment on the market value of property. I suspect that the statutory basis for rates determination will entail a pay first argue later policy and that the municipal authorities will not endorse a policy by which a ratespayer may pay on a lower assessment.

However the political considerations behind the law are still open to debate. Is it correct that residents and ratespayers have no recourse against the municipality who simply misuses their funds? The view of the courts appears to be that the law itself is the recourse and in exchange for the protection which the Rule of Law brings we surrender our right to self-help in the form of a rates strike; of course we can turn to our courts (we have a Constitutional right of access to legal recourse after all) but the record suggests that litigation by many follows debt collection, commerce and evading conviction for criminal behaviour and not the maintaining a democracy. Perhaps South African’s are not sufficiently prepared to litigate about important issues and principles, being too afraid of descending into the perceived (and possibly real) litigant society of the USA and the unfortunate cynicism that may emerge on finding that whilst poor unsatisfactory and shoddy legal services may be obtained easily, quality litigation is both costly and inconvenient - unless you happen to be a public official facing criminal charges. (Just ask the President, whose office repeatedly demonstrates the shoddiest of work while his personal criminal defence team extract massive fees paid by the fiscus.) Sadly certain government entities are more afraid of certain well connected entities than they are of the law itself – rather keep particular business or party interests happy than comply with the law, after all who is going to take you to court and even if they succeed it is public monies that are spent; and this may include Kouga. In addition to the courts we also have recourse through the municipal council’s legislative mandate, we can lobby for a municipal policy which allows the creation of a holding trust for ratespayers funds in dispute. The municipality would be well served by a policy which sees the proper declaration and resolution of individual and collective disputes instead of a general disquiet that currently exists.

 

Suffice it to state that unless a policy creating space for the entrustment of monies by ratespayers as a withholding rates unless specific issues are addressed is created a rates strike by ratespayers simply will not succeed and Kouga not only have a right but a legal duty to break the strike by cutting services. Of course the prospects that some ratespayers purporting to be in a rates strike are simply acting on a pretext which undermines service delivery could see an improvement for residents as the municipality will have more funds. Unfortunately the issue is one upon which measurement of the management and administrative structures are important, further as many municipalities have demonstrated the two dominant political organizations in Kouga both appear to set course on policies which are as prejudicial to the poor as they are idiotic. In the present instance  the Kouga Municipality has bizarrely embarked on terminating access to tenants without complying with the prescripts of the Constitutional Court decision in Joseph & others v City of Johannesburg & others 2010 (4) SA 55 (CC) which requires that 14 days notice be given before terminating access to electricity and that the municipality must make it possible for tenants to enter into a relationship with the municipality for services. Unfortunately this is a subject on which the concept and principles of sub iudice prevent me from commenting at this time.

 

[Small category note: I have included a tag “legal opinion” although this is not to suggest that this piece is or should be viewed as a legal opinion, but rather that it has a bearing on an issue relating to the seeking of or reliance on legal opinions. A legal opinion can be sought from one of the many legal practitioners within the Kouga municipality] 

Why are South Africans so jealous?

Contributed by John Oram

The topic of Julius Malema riches gets everyone’s knickers in a twist – but why? Surely, if you too could live the lifestyle he leads, you wouldn’t want an experience from the South African Revenue Service (SARS) that is likely to feel like an anal-probe delivered by an epileptic monkey?

So what if Julius owns houses worth over R4.6 million. So what if there is a huge Malema trust fund (used for charitable purposes only).  So what if his watch is valued at R250,000. So what if Mr Malema has some swanky luxury cars.  And so what if he can amass all this by shrewdly using his salary of R25,000 per month? Instead of proclaiming him to be a financial genius,  South African haters mock the poor man.

Could it be that South Africans are fuming with envy at his success?  One thing is for sure, after Mr Malema walks away from the SARS audit squeaky clean (if there will actually be an audit) – South African financial advisors are going to be under serious pressure to up their game.  The public will expect them to deliver the kinds of returns Mr Malema has achieved with his capital.  Fund managers across the country are reported to be sweating Red Bull.

Further,  I am pleased to report that this issue has gone international.  Barack Obama and economists from all over the world,  including those pondering the outcome of the US national debt crisis,  are also keeping a keen eye on the situation.  Mostly, Mr Obama is wondering if Mr Malema will share his financial leverage secrets so that he may rescue America’s fiscal deficit using his presidential salary.

Come on Julius, please spread the love!

Ja, Well, No, Fine the authorities

By Trevor Watkins, Chairman Jeffreys Bay Residents Association 

When the authorities wish to discipline their citizens for some action or omission, they usually start by issuing a fine.  This is meant to remind you that you have done wrong, that you are being punished, and that if you do wrong again, you will be punished again.  Given the enthusiasm with which the authorities fine their citizens for every imaginable type of transgression, this system works well for them.

If you forget to brake going down the hill into Humansdorp you might get a R500 fine. If you forget your ID book and drivers license when you pop out for a loaf of bread, that could cost you R200. If your dog makes a tiny little mess on the beach, that could cost you R300. As I am sure we have all heard the official smugly informing us, “I’m just doing my job. I don’t care what your excuses are. Sign here to acknowledge your guilt please.”

If your brake light on your car has burnt out and you get stopped, then you will get a big fine. If you go out in the same car tomorrow and get stopped again, you will get another big fine.  Every citizen is subject to a possible fine every day. The authorities make an absolute fortune out of  our inability to keep up with every little rule and regulation that we are supposed to know.  It is just another tax upon the already over-taxed citizens.

So, why can’t we, as residents, fine the authorities when they mess up? When their incompetence turns our roads into deathtraps, when they fail to produce the correct documentation at the correct time, when they allow tons of sewage to spill onto our beaches, why can we not just “Do our jobs” and fine them for every transgression?  If I see a large pothole on a municipal road, why don’t I issue a fine against the municipality for every day that the pothole remains unfixed? If I see raw sewage in a pool on the beach because the municipality did not maintain its pumps adequately, why do I not issue the municipality with a huge fine for every day that the sewage remains? And since this problem affects every citizen who wanders down to the beach, why not let every citizen issue a fine to the municipality? After all, they have no problem issuing a fine to every citizen whose dog wanders onto the beach.

Of course, if we held the authorities to the same standards as they hold us, they would quickly go bankrupt due to their incompetence. Its okay for them to hold a business to a high standard of hygiene, for example, but don’t expect themselves to be held to the same standard. It would be a bureaucratic nightmare, they say. It could never work.  Actually, its really quite simple. The municipality does not need to pay out any cash to its citizens, and it does not even need to keep a record of fines issued against it. We will keep a public record of fines against the municipality, and the amount of the fines will be deducted from any fines owed TO the municipality by citizens and residents. In other words, any traffic fine or municipal fine against you can be set off against any fine you have levied against the municipality.  Good plan? Sure. Would the authorities agree to it? Never – its not in their interests.  We are the sheep to be shaved, not them.

At least we can do one side of this arrangement. The Jeffreys Bay Residents Association has setup a page on their website at https://sites.google.com/a/jbayra.com/jbayra/opinions-menings/municipal-fines

Where anyone can add an incident to the database and assess a fine against the municipality.  You can also view all the fines assessed by other residents so far. 

Make your anger and indignation at the shabby way you are treated by the authorities heard. Fine them, again and again, for every act and omission they are responsible for.

2 May 2011 – South Africa’s Tax Freedom Day

South Africans pay higher taxes as a percentage of GDP than Australians and Americans. While their Tax Freedom Day (TFD) fell on 6 April and 16 April 2011, respectively, SA’s will fall on 2 May. The citizens of those countries have more economic freedom than we do because they spend less of the year working to pay their taxes.   Garth Zietsman, the FMF Council Member and honorary statistician who annually calculates TFD says, “This year, South Africans will start working for themselves eight days earlier than last year’s 10 May as a result of the recession. As a percentage of GDP, we will earn less money and pay lower taxes, but, unfortunately, that does not mean that government will spend less. They are going to borrow and spend more, which will mean all South Africans will be faced with higher taxes in future to pay the interest on these borrowings and to repay the loans.”   How does government get its hands on the finance it needs? Through income tax, VAT, fuel tax and the host of other taxes we all have to pay. To determine the real impact of all these taxes on any one individual is very difficult, but the TFD measure was developed to try and give citizens some idea of how much of the nation’s earnings government takes from them in taxes. In SA’s case, the nation will spend 121 days, or 33.2% of their time, working to pay their taxes and only on 2 May, the 122nd day of the year, will they be able to start working for themselves.   Of course, taxes are spread throughout the year and a chunk of every day’s earnings goes in taxes. We nevertheless gain a useful perspective on taxes when we calculate an overall average tax burden by converting into days and months the time that a nation spends on earning money with which to pay taxes. It is a sobering thought to know that we have only 244 days or 66.8% of the year left to work to pay all our other expenses and to try and put away money for retirement.   TFD gives us a macro-economic picture of taxes, taxpayers and the economy. To determine your own personal TFD add up the total taxes you pay in a calendar year (including the hidden taxes that are contained in the purchase prices of most things you buy), divide the number by your total income for the year, multiply by 365 days (366 in a leap-year) and add 1 day.   Everyone’s earnings are not the same and the tax burden is not spread evenly. The top 1% of American taxpayers, for instance, pays 40% of all US taxes and the top 1% of Australian taxpayers pays 18.5% of Australian taxes. In both cases we would need to know their total incomes in order to calculate their collective TFDs. Similar figures for SA are not readily available but according to SARS 2009 figures, 52,446 taxpayers (1.5% of the total) earned more that R1m each and paid 24.5% of all income taxes collected from individuals.   Economists tend to disagree over the level of taxes that individuals should pay, who should pay the taxes, what effects taxes have on their lives, and what form taxes should take. US economist Arthur Laffer became well known for his famous graph (the Laffer Curve) which suggested that there is a tax rate level beyond which total taxes tend to decline rather than increase when the rate is raised. According to this theory, cranking up the taxes on the highest-earning taxpayers can be counter-productive, while reducing the rates can result in increased tax income for the state. Ronald Reagan’s administration proved the accuracy of this prediction when it slashed tax rates and ended up with more revenue.   Numerous reasons are put forward for the Laffer Curve phenomenon; higher after-tax income increases incentives and productivity; money saved from lower taxes is invested to increase production, and taxpayers spend less time on tax avoidance schemes and more on growing their incomes. Whatever the reason, some governments have implemented low-tax regimes with positive results. Unfortunately, the lessons learned are soon forgotten and calls for higher tax rates are once again making the headlines.   TFD for the UK this year has been calculated as 30 May, 28 days later than SA. Other TFDs due to occur after SA’s as indicated by their 2010 TFD dates are Croatia (10 June), Israel (22 June), Poland (23 June), and Sweden (20 July). Swedish people spend 200 days (55% of the year) working to pay their taxes and have only 165 days to work for themselves.   At the other end of the scale is Mauritius. This small island nation is the envy of most taxpayer nations. Its TFD fell on 22 March as a result of a deliberate effort to cut back taxes (15% tax rate for individuals and companies) and to make it more investment friendly. It is 9th on the 2010 Economic Freedom of the World index compared to SA’s 82nd, and 20th on the World Bank’s Ease of Doing Business index, with SA at 32nd.   According to FMF Executive Director, Leon Louw, “A deliberate effort on the part of government to give SA an earlier TFD would make the country more business and investment friendly, increase disposable incomes, savings and investment (including foreign direct investment), increase economic growth, and reduce unemployment”.   For more information: Garth Zietsman 083 309 3572 or Gail Day 011 884 0270 Information supplied by the Free Market Foundation of South Africa.