The City of Cape Town is considering an appeal after a landmark Western Cape high court ruling declared key municipal charges unlawful, a decision the metro warns could shift the financial burden to lower- and middle-income households.
In a judgment handed down on Thursday, the court found that fixed charges for city-wide cleaning, water and sewerage, introduced in the city’s 2025/26 budget, are unconstitutional, invalid and inconsistent with national legislation and the city’s own tariff by-laws.
The charges, which were linked to property values rather than consumption, have been set aside with effect from June 30.
Mayor Geordin Hill-Lewis said the city is now modelling the impact of the ruling, warning it could have unintended consequences.
“The implication of today’s ruling might be that fixed charges go up for many families and go down for more affluent families. We will have to carefully consider how best to protect middle- and lower-income households going forward,” he said.
The case was brought by the South African Property Owners Association, which challenged the legality of charges calculated according to property value bands.
AfriForum also filed a separate application, arguing the tariffs violated the constitution and the principle of legality. The city opposed both applications.
At the heart of the dispute is the city’s attempt to restructure how it funds essential services.
Court papers reveal that as far back as 2017, during the height of Cape Town’s drought crisis, officials warned that declining water consumption, driven by strict restrictions and increased use of alternative water sources, had sharply reduced municipal revenue. Sewerage tariffs, linked to water usage, were also affected, leaving gaps in funding for infrastructure and services.
The implication of today’s ruling might be that fixed charges go up for many families and go down for more affluent families. We will have to carefully consider how best to protect middle- and lower-income households going forward.
— Cape Town mayor Geordin Hill-Lewis
In response, the city introduced a revised tariff model in 2018, including fixed charges alongside consumption-based billing. This approach was expanded in the 2025/26 budget, when three new fixed charges, for city-wide cleaning, water and sewerage, were billed separately and pegged to property values.
But the court found this model fundamentally flawed. It ruled that the charges violated section 74(2) of the Municipal Systems Act, which requires tariffs to be equitable and generally linked to usage. Instead, residents were billed fixed amounts regardless of consumption, meaning costs were not proportionate to actual service use.
“The charges are not consumption-based,” the judgment states, adding that ratepayers were not treated equitably and that the city-wide cleaning levy did not meet the definition of a lawful fixed basic charge. The court also found that the water and sewerage tariffs deviated from the city’s Water Services Development Plan and tariff policy.
Political fallout has been swift. The GOOD Party, which was admitted as an intervening party, accused the DA-led administration of failing to advance meaningful redistribution. Secretary-general Brett Herron said the tariff system unfairly targeted residents who could not afford escalating costs, including those affected by gentrification and rising property values.
“Worst of all, the scheme was underwritten by lies,” Herron said, arguing that pro-poor services are largely funded through national government grants rather than cross-subsidisation from wealthier residents.
The Freedom Front Plus welcomed the ruling, saying it highlighted the city’s failure to balance revenue generation with fairness. The party called for a return to transparent, consumption-based tariffs in the next budget cycle.
Hill-Lewis cautioned that if the ruling stands, it could force the city to shift city-wide cleaning costs back into property rates, potentially increasing the rate-in-the-rand despite a proposed 10.2% reduction in the draft 2026/27 budget.
He stressed that the charge does not generate new revenue but funds an existing service that has historically been paid for through mechanisms such as electricity surcharges.
Recent reforms, he said, aimed to ring-fence waste management funding and align with National Treasury guidelines, a move that has already unlocked hundreds of millions of rand in grant funding.
As the city weighs its legal options, the ruling sets up a critical test of how municipalities balance financial sustainability with equitable service delivery, and who ultimately pays the price.
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