Joburg mayor hikes residential tariffs but backtracks on property tax increases

Johannesburg mayor Dada Morero has revised his administration’s proposed property tax hikes tabled last Thursday after fierce resistance from coalition partners akin to the fallout between parties in the national coalition government over the proposed VAT increase.

The city’s R87.6 billion adjusted budget was passed with a 138-vote majority in March but the ANC’S coalition partners ActionSA, the Economic Freedom Fighters and the Patriotic Alliance later balked over new details that emerged, according to a well-placed source.  

Disputes erupted when the rate proposals were published on the city’s website, prompting the coalition partners to demand that the mayor make amendments.

In a statement last Friday, Morero acknowledged the financial burden on Johannesburg residents, saying the revisions had been made to reflect their “lived realities”.

“Households are already under immense financial strain. I am more than alive to the fact that every rand matters and we must do everything possible to alleviate financial pressures on our residents,” he said.

The revised tariff hikes, including a 13.9% increase for sanitation and water, are aimed at boosting the city’s revenue. This is lower than the 15.8% tariff increase proposed by Rand Water, the largest bulk-water utility in Africa, which supplies the critical resource to municipalities, mines and large industries in Gauteng and surrounding areas.

The revised tariff increases also include a 6.6% rise in refuse removal and waste-management charges and a 4.6% hike in property tax from 1 July — up from 3.8% in the financial year ending 30 June 2025, but down from an initial proposal of 5.6% — while the demand management levy will go up to R65.06 from R33.70. 

The threshold for property tax exceptions will be retained at a valuation of R300 000, from earlier plans to cut this to R200 000. Experts say property tax makes up the second largest share of the City of Johannesburg’s revenue collection, contributing 26% to the budget, behind electricity charges which account for 30%. 

While the city’s proposed 12.51% electricity tariff  was in line with power utility Eskom’s approved municipal tariff hike of 12.74%, the municipality had planned to increase the controversial R200 meter charge collected from prepaying customers to R270. It has scrapped the planned rise in the prepaid electricity surcharge.

In Friday’s statement, Morero said these scaled-back increases had resulted in the overall projected revenue falling by nearly R1 billion but conceded: “We must acknowledge the economic hardships our residents face daily.”

During a budget consultation meeting in Roodeport on Saturday, the mayor told residents that the tariff increases had been “kept moderate”.

Under pressure from the national government to improve service delivery, the City of Johannesburg has embarked on several initiatives, including an R800 million refurbishment of the Metro Centre and plans to open the Johannesburg Art Gallery after the partial reopening of the city’s main library, Morero said in an update on the state of the city last week.

There has been a dramatic decline in basic service satisfaction levels among Johannesburg residents, according to the Quality of Life survey for 2023-24.

Asked by the Mail & Guardian whether the tariff hikes and subsequent revisions will affect the party’s coalition with the ANC, ActionSA’s Johannesburg chief whip Lebogang Mogukanene said the party was concerned about the proposed tariff increases but added that public meetings on the city’s Integrated Development Plan were a good opportunity for residents to air their grievances.

“We don’t want to believe that our position can strain our working arrangement with other political parties. We have made our position clear — we are representing a constituency and our position is solely directed by what they request from us. One will recall that from the onset our agreement was based on an item-by-item arrangement and that position remains,” he said.

Mogukanene said the proposed higher tariffs on water and sanitation would increase the financial strain on residents, potentially leading to lower payment compliance and, in turn, reduced revenue collection for the city.

The Democratic Alliance’s spokesperson for finance in Johannesburg criticised the coalition running the city over the proposed tariff hikes, saying they would worsen residents’ financial woes while service delivery remained poor. The DA has also criticised the ActionSA-led coalition in the City of Tshwane for introducing a new waste-removal tariff.

“If the city [Johannesburg] was running efficiently and properly we could absorb some of the base costs regulated by the national government instead of passing them on to residents,” Chris Santana said, pointing to struggles with the Johannesburg Metro Police Department’s fine collection, which had led to a R900 million write-off.

The chairperson of The Johannesburg Property Owners and Managers Association Angela Rivers urged the council to “stop looking at boosting its finances by charging citizens more”.

Rivers has regularly participated in public consultations and objected to tariff increases through written submissions and presentations. Since 2019, she has raised concerns at the inner-city partnership forum about the financial burden these increases place on tenants. But she says her repeated requests for meetings with city officials over the past eight years, including mayors and the mayoral committee member for finance, have been ignored.

She said there was a growing trend of tenants moving from formal residential properties to informal rentals, where they could access services without payment. This spatial shift was creating a dual loss for the city, both in terms of lost revenue and the financial burden of providing free services in informal settlements and derelict buildings.

“They need to clean house, tighten up processes and wastages, ensure staff do the work they are paid for. R19 billion for staff costs and we have the worst service delivery we have ever had,” she said.

The chief executive of the Organisation Undoing Tax Abuse Wayne Duvenage said what residents were seeing at local government level around the country was “not dissimilar to that which we are seeing play out at national government, where the tax levels have been pushed to the limit and it’s difficult to get more out of the people”.

“The problem with the city of Joburg’s various tariff increases is that it is becoming too expensive to own property in Joburg. This is causing people and businesses to relocate to other areas and is not good for the long-term success of the city. 

“The mayor and his council should start to tackle waste, corruption and maladministration, before they start to lean on their residents and businesses for more money,” he said.