Municipalities suffer as state owes R18.6bn in rates and taxes

While municipalities struggle to deliver services to residents due to their poor financial states, government owes billions in rates and taxes to municipalities across the country. 

According to finance minister Enoch Godongwana, organs of state collectively owe municipalities R18.6bn for rates and taxes. The minister revealed this in parliament last week when answering a question posed by EFF MP Vuyani Pambo.

Some of the debts have not been paid for more than a year.

In Gauteng, the state had a debt of R3.5bn by the end of July, with provincial government departments accounting for most of the debt. This has been a persistent problem for the provincial government, which in 2022 paid municipalities more than R12.9bn. 

In the Free State, the debt was R3.2bn, with provincial departments owing the most. Government also had a debt of R3.2bn in KwaZulu-Natal. It had the lowest debt in the Western Cape. 

Last year, deputy president Paul Mashatile promised cash-strapped municipalities government would provide debt relief mounting to billions. 

According to National Treasury’s 2024 Budget Review, 72 applications were made by municipalities for debt relief by December 2023.

“For the debt to be written off in equal annual tranches over three years, municipalities need to comply with set conditions. The conditions include enforcing strict credit controls, paying monthly electricity accounts and enhancing revenue collection.

“By December 2023, 72 applications had been submitted, totalling R56.7bn of total municipal debt owed to Eskom. Seventy applications totalling R55.2bn had been approved as of January 2024,” the document read.

Introducing the debt relief programme last year, Mashatile said the culture of nonpayment, not only by municipalities but also government departments and residents, was concerning. 

“At the end of December 2022 municipalities owed Eskom R56.3bn, and the debt is rising. It is clear we need a debt relief strategy that will acknowledge the inherent risk of unviable municipalities.” 

He said government would provide the power utility with debt relief of R254bn in the next three years.

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