Despite having settled the huge July rates hike debacle with schools, the City of Johannesburg remains locked in a legal battle with at least one party.
Civic organisation AfriForum says it is proceeding with its “litigation process against the metro regarding the property tax policy and served replicating documents on the metro last week”.
The case is the result of an amendment to the Municipal Property Rates Act that came into effect last month. This led to 741 independent schools and 921 state schools receiving whopping rates bills at the end of July.
The new law scrapped the education classification that applied to schools, which after previously charging them as public benefit organisations now reclassified them as businesses.
The result was that state schools were hit with rates bills about six times higher than their June bills, and private schools billed at 10 times their previous rate.
Responding to the outrage and fallout that followed, Joburg mayor Mpho Phalatse said the city had been overwhelmed by queries, complaints and lawsuits.
AfriForum and JSE-listed education group AdvTech instituted legal action against the city, while the National Alliance of Independent Schools Associations (Naisa) went public with their objections to the increases, which they described as unfair.
“The decision by the City of Johannesburg to evaluate schools as businesses does not take into account the majority of schools in Naisa are classified as public benefit organisations and now benefit from rates exemptions. It was also carried out without public comment,” said Naisa’s Anne Baker, also deputy director of the Catholic Institute of Education.
On Monday last week Phalatse announced the city would introduce a temporary one-year solution of a 5% increase for all schools while they renegotiate the change in law with the department of co-operative governance and traditional affairs (Cogta), which was the entity responsible for amending the national rates and tariffs.
Finance MMC Julie Suddaby said the corrected rates would be backdated to July 1. The 5% increase would apply to public and private schools in the short term as the city pleads with Cogta to reintroduce the education category for rates tariffs. She said authorities were urgently resolving the situation before schools were forced to close or children were removed.
However, last month AfriForum and AdvTech sought a court injunction against the City of Joburg, the municipal manager and mayor, the minister of co-operative governance and traditional affairs, the minister of basic education, the MEC for education and the minister of higher education and training. As a result, the Joburg high court ordered that no credit control measures may be taken against any education institution that fails to pay the hugely increased rates bill.
The case was then postponed until October. But while Phalatse expressed hope that the matter would be speedily settled out of court, AfriForum has refused to back down. AdvTech declined to comment.
Responding to the city's announcement that any levy above the standard 4.85% would be written off at educational institutions for the rest of the financial year, AfriForum said it would stand firm until the finalisation of a permanent resolution to the dispute.
“Though, it is a step in the right direction it is still unclear how this process will work, what the impact will be on the budget and what measures the municipality will put in place to protect schools against collecting institutions,” said Morné Mostert, local government affairs manager at AfriForum.
“The parties who are litigating in this matter can play an important role to ensure this process results in schools being protected.
“Until there is a definite answer on how the metro plans to rectify this situation, we will continue with the legal process,” Mostert said.
Phalatse’s spokesperson Mabine Seabe said the mayor was engaging with Cogta on the matter.
Councillor Siseko Mbandezi, MMC for finance at the City of Cape Town, said government schools fall within the property category “properties owned by an organ of state and used for public service purposes”.
This meant they fell within a legislated ratio, and the city was compelled to charge them at no more than a quarter of the residential rate. He said independent schools not operated for profit fall within this category.
He said the schools run for profit fell into the “business and commercial” category and therefore “rated at double the residential property rate-in-the-rand”.
He said this was the rate at which the city had always charged schools run for profit, and that was why there had been no shock hike for them in July.
The eThekwini Metro did not respond to requests for information on how the amended legislation has affected schools in KwaZulu-Natal.
