eThekwini R75bn draft budget sparks debate over ratepayer burden

eThekwini mayor Cyril Xaba tabled his draft R75bn 2026/27 budget on Tuesday, which proposes hefty tariff increases ranging from 5% for property rates to 16% for water tariffs.

The city, which has declared 2026 as the year of accelerated service delivery, said the budget, which is made up of an operating budget of R68.8bn and a capital budget of R5.9bn, prioritises the acceleration of repairs and the upgrading of bulk infrastructure to enhance service delivery and stimulate economic growth in the city.

The following hikes have been proposed:

• An electricity tariff increase of 10.5% for business and residential consumers;
• Water tariff increase of 16% for business and 15% for residential consumers;
• A sanitation tariff increase of 14% for business and 13% for residential consumers;
• The refuse tariff increase is 13% for residential consumers, with varying tariffs for business customers based on the level of service; and
• A proposed property rates increase of 5% is on the table.

Xaba said the budget came at a “pivotal moment in both the global and domestic economic landscape, one defined by heightened geopolitical tension, rising cost pressures, and an accelerating reform agenda within South Africa”, referencing the escalating conflict in the Middle East and the war involving Iran which has triggered a global energy crisis.

“The city faces significant internal challenges of ageing infrastructure, service delivery backlogs, and growing demand driven by urbanisation and economic pressure. These challenges are further compounded by the increasing cost of delivering basic services in an environment of rising input costs and constrained revenue growth.”

He also announced a raft of rates and lifeline rebates to assist the indigent and encourage economic development. These include:

•⁠ ⁠Residential properties valued up to R350,000 will be exempt from paying rates. For all other properties valued above R350,000, there are no rates charged on the first R120,000.

•⁠ ⁠Pensioners, child-headed households, disability grantees and medically boarded properties are exempt from paying rates, where their annual rates do not exceed the maximum rebate of R5,770. A maximum limit of R 2.5m applies to the value of the property in respect of the pensioner’s rebate.

•⁠ ⁠The first 6kl of water is free to households with property values under R 350,000.

•⁠ ⁠The first 65kWh of electricity is free to residents using less than 150kWh per month in eThekwini reticulated areas, and the first 50kwh of electricity is free to residents using less than 150kwh per month in Eskom reticulated areas.

•⁠ ⁠Residential property valued up to R350,000 is exempt from the domestic refuse removal tariff. In addition, a free basic refuse removal service is available to indigent consumer units living in rural, informal settlements and non-curbside residences.

•⁠ ⁠The first 6kl of effluent disposal is exempt for all properties with values under R350,000. A free basic service is also available to indigent consumer units with VIPs, urine diversion toilets and informal settlements serviced by means of a toilet/ablution block within 200m.

The cost of free basic services is more than R 5.6bn.

The city is also implementing R1.1bn worth of trading service reform projects in the 2026/2027 financial year, driven by the National Treasury, to improve water, sanitation and energy efficiency.

These are:

• 21 energy management projects to the value of R331m are in the 2026/2027 budget to address cable replacement and substation security to reduce electricity loss and vandalism, as well as street lighting. 
• For water reforms, there are 19 projects to the value of R227m to address water loss through pipe replacements and metering.
• For sanitation reforms, there are 33 projects to the value of R434m to address sewer reticulation and upgrade of wastewater treatment works; and
• For waste management reforms, there are two projects to the value of R110m relating to the upgrading of landfill sites and an additional fleet for improved service delivery.

The capital budget will also address backlogs in basic services and the renewal of the infrastructure of existing network services, especially water and sanitation, with a R5.9bn budget for the 2026/27 financial year.

DA ward councillor Andre Beetge questioned whether the budget was “truly serving the city or simply milking the ratepayers”.

“There is a mandatory water loss levy for domestic households, slated to be implemented in the upcoming financial year. Notably, this levy has already been factored into the budget — even though the policy authorising it has not yet been communicated to the public, or approved by this council. This raises serious questions about transparency and proper planning. The 5% rates increase cannot be ignored.

“Ratepayers will effectively face quadruple jeopardy: increased property valuations, increased randage on the new property value, mandatory water and sanitation levies of R1.50/kl each, and the water loss levy.”

Beetge said the informal housing deficit of R126.5m is being charged to the city’s rate fund, and the deficit for new development housing and hostels, amounting to R322.3m, also falls on ratepayers.

IFP whip in the city’s finance committee, Jonathan Annipen, said the party had taken a decision to abstain on the tabling of the draft budget.

“A municipal budget is not merely a financial instrument, but a moral document that must reflect both the will and the needs of the people. The IFP is of the firm view that this budget must be assessed within the context of the current national and global socio-economic climate, where rising economic pressures continue to place immense strain on ordinary citizens.

“Across eThekwini, many residents are struggling to meet their financial obligations to the municipality — not out of unwillingness, but due to genuine financial hardship. The prevailing conditions of high unemployment, escalating crime, deep inequality, and widespread poverty cannot be ignored.

“In this context, the IFP cannot, in good conscience, support tariff increases at a time when food prices and basic living costs have become increasingly unaffordable for many households,” Annipen said.

The draft budget will be released for public consultation across all sectors of society, and the final budget is expected to be adopted in May.

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