South Africa, the failing democracy and lack of service delivery by the municipalities, is escalating into a damaging situation. Municipalities are supposed to represent the lowest of local government. They are also the government’s local representatives for the rolling out of services.
However, in the South African context this does not happen; although the councillors and officials draw princely salaries, excessively higher than the President’s salary. Instead of poverty alleviation, they are determined to enrich themselves. An example of this fact is that the government since 1994 has built more than a million houses for the poor. This should be an extraordinary achievement; yet the quality of the houses built is of a low standard. Many complaints are reported on a continuous basis; instead of a flagship, it has now become an albatross around the government’s neck.
Water purification and distribution are other examples. The water quality throughout the country is deteriorating at an alarming level. At some water plants, no chlorine gas is available to treat the water. Sewerage is running rampant into the rivers; the environment is suffering and ultimately the people living in that river’s catchment area. Infrastructure is not adequately maintained. Municipality chiefs get a bigger commission on a new system, and this is a fact.
Municipalities are billing excessive, unexplained amounts to the traditional white areas whilst the new black suburbs pay significantly less. Targeting money from the public for lack of services is top priority for the South Africa Municipalities, who contribute to the failing democracy.
Mr Trevor Manuel, a Minister in the Presidency of President Zuma, and former Minister of Finance, has actually been instrumental in creating a large part of the problem. The Municipalities had an unencumbered source of income via a system of Regional Services Council’s levies under Act 109 of 1985.
This was a system whereby a levy was raised on all salaries and wages paid in the private sector as well as public servants, normally 0.2 percent on gross payments. An additional levy was raised on income, normally 0.15 percent. There was a system in place as to how these levies were to be raised and then paid to a District Council. In the beginning of the implementation of the system, there were almost 56 District Municipalities under whom the remaining 270 Municipalities resorted. These levies were distributed by the District Municipalities of South Africa, to the various Municipalities under their control. Infrastructure projects to the benefit of the entire area were also undertaken by the District Municipalities.
The system was administered by the District Municipalities, and the financial aspects were controlled by the South African Revenue Service (SARS). The reason thereto was that the tax payer’s information was confidential and that this system would expose such sensitive and classified information. This system garnered an income of R8 billion for the Municipalities around 2006.
In 2006 the former Minister of Finance, Manuel, abolished the payment of these levies, yet the law was never repealed. At this time, billions were still owed to the municipalities. The promise from central government was that the shortfall would be made up by the Division of Revenue Act (DORA).
DORA used a formula to calculate and pay over contributions to municipalities. This proved to be a complicated system. The municipalities with their burgeoning employees and increasing lack of competency have continuously failed to calculate properly in order to achieve the required funds. Whilst the payment of the levies was abolished, a two year period for this phasing out was put in place.
The City of Tshwane Municipality (COT) (previously all the Municipalities in Pretoria now grouped together) appointed agents to collect these levies. In this specific one company at the time, Mahlatsi Financial Enterprises (Pty) Ltd had aggressively collected such levies and pointed out to the COT that they have a legal obligation to collect these levies due. One point made by them was that SARS did not execute their legal obligations is this aspect under the Act, despite being requested several times by the COT. Even though instigating legal action by the COT, they lacked to follow the advices of Mahlatsi in order to subpoena SARS who then had to provide an analysist of the levy payer in question. In this regard, the outstanding levies by the end of 2008 due to the COT from one for the collection agents were estimated to be R 800 million. The law also made provision for criminal charges. In this regard, these criminal charges still exist today.
The documents recording all these aspects show that the Banks and several other Financial Institutions had to be called to book. National Treasury had to pay to the COT at that time R 170 million. This was apparently due to proceeds on investments within the Regulations of the Act.
Another levy payer who did not pay the correct amount of levies due is South African National Roads Agency (SANRAL), the infamous company, who is busy tolling the economy of the Gauteng Provence, which includes Pretoria and Johannesburg into oblivion. According to these documents in 2008 SANRAL owed the COT some R 20 million. SANRAL relies on the government law structures to collect outstanding toll road levies. While their organization is guilty of a criminal offence due to the non-payment of the levies owed on their investment income. In one incident when SANRAL was approached, the CEO, Mr Nasir Alli, complained to the Mayor, then Father Makhwatsha – a pretty clueless person, and the company was given an ultimatum by the COT to fire the Inspector at the time.
SANRAL has not paid what is effectively a Municipal Tax and had won various court cases against the opponents to the toll roads. But they did not see their way clear to pay their Municipal dues. In a legal system which is of a dubious nature, how can Municipalities deliver the services obligated by them under the law if they did not receive the moneys so payable to them? Criminal charges have been brought by the South African Police Services (SAPS) against the COT of Tshwane for failing to recover their monies due, and the SAPS is not known for its efficiency. Whilst the issue levies were subjected to legal action, the judge in this case in the Pretoria High Court, the Honorable Hans Fabricius declared the levies ultra vires, this despite being implicated for the non-payment of some R 130 000 in levies payable by himself.
Suffice to say that the COT and legal advisors did not listen to the advice dispensed by Mahlatsi and the impact of this is that the Municipalities nationwide had lost some R 8 billion in unencumbered funds.
Criminal charges were not pursued as they should have been; these charges still exist until today. SANRAL should pay the legal penalties for non compliance. Why should toll levies be paid to a business which does not follow the law? In law, one cannot approach the courts with dirty hands. However, nobody at all levels of government want to take cognisance thereof. Because of the shareholders of the service providers to SANRAL? The Guptas, close friends and associates of President Zuma. Perhaps the President should have sent the bill for the controversial swimming pool, (fire pool) built at this Nkandla home to the Guptas.
While in South Africa the failing democracy brought about by the municipalities for their lack of service deliveries continues, the infrastructure crumbles daily. It is not lack of funds that cause the failure, there is plenty of money, and it is more about enrichment. Several members of the country are angry and over the past year, there have been an increase in the number of service delivery protests. These protests impact on the police force and so the vicious circle of not correcting the problem continues.
By Laura Oneale