Rates: valuations unfair?

Market-related valuations of homes for rates adjustments are again the subject of heated debate. Homeowners say the system is unfair and municipalities should find other ways.

Local authorities are busy trying to allay the fears and complaints of ratepayers around the country nervous of further increases following the upcoming round of re-evaluations.

To municipalities, levying rates is a way in which they raise revenue to help pay for utilities, services, lighting, maintenance of domestic infrastructure, etc. To homeowners, it’s just another tax on property — which is unevenly distributed and unfairly evaluated.

Various attempts have been made to improve the system, such as taxing the land and not the improvements rather than a levy on the market value of the property.

In Cape Town in particular, where the latest valuations are scheduled to come into force on 1 July this year, the city’s neighbourhood-based evaluation system has come under attack. Homeowners point out that home values in neighbourhoods vary in the extreme. Under the system recent sale prices are taken into account and then form an "average" for the locality.

The city has 780 000 rateable properties, according to the Council, and a population (by last census) of approximately 2.5-million. Current rateable values are still being finalised as at the time of writing, but they are open to objection from 22 February until 30 April. Eighteen inspection areas have been opened where ratepayers can seek assistance during the objection period. One anomaly appears in that the City has announced that the new valuation roll will be independently audited, yet the City Valuer has already certified it.

Local government MEC Anton Bredell has joined the ranks of those who perceive the market value system as problematic and unfair. He asks: "What is a market-related price? Many owners are paying high rates for improvements to their homes; the system punishes people for doing this."

Worst hit are retired people and pensioners who often cannot pay ever increasing rates — and utility fees such as water and electricity — and are forced to sell their homes. "The poor," says Bredell, "have to pay for the rich, which is unjust. We can’t sit by and watch people being taxed out of their houses. Tax must be fair and reasonable."

Bredell and other opponents of the Cape Town system also criticise the fact that the City hires private firms to determine property values in order to keep the valuation roll up to date.

One option long proposed by professional valuer Peter Meakin is a land tax. But so far his comprehensive proposal and motivation has fallen on deaf ears.

Published courtesy of Intellectual Property Magazine.

Article from: www.iafrica.com