The South African Local Government Association (Salga) has proposed that legislation be amended to allow SARS to divert tax refunds from individuals who owe money to municipalities, in a bid to help municipalities that struggle to recover their debt.
As at the end of June, municipalities were owed roughly R180 billion by households, businesses, and national and provincial government spheres.
“We can improve municipal revenue collection instruments through measures including amending the Tax Administration Act so that before SARS pays out refunds, it first checks if the particular taxpayer owes money for rates and taxes,” Salga President and Polokwane Mayor, Thembi Nkadimeng said last week during the National Council of Provinces’ Local Government Week.
Salga is considering a number of new measures to improve municipal revenue collection across the country.
According to Nkadimeng, of the debt owed to municipalities, an average of 59% of municipal debtors are not recoverable.
Other measures being considered include:
• Write-offs: This will include putting together measures to write off the ever-increasing household debts to municipalities, including the introduction of a national bill for the writing off of these household debts in exchange for the installation of prepaid water and electricity meters.
• State employees: Amending Schedule 2 Section 10 of the Municipal System Act so that it is not only municipal councillors and employees who may not be in arrears with their municipal bills for a period of more than three months. This requirement should be extended to all state employees and elected and appointed representatives in other spheres.
• A new agency: The establishment of a District Revenue Collection Agency. This will achieve better collection efficiencies and will free up municipal personnel to focus on more pressing service delivery efforts. SARS systems and processes would be considered in putting this together after due diligence is done.
• Procurement changes: Amending procurement regulations to make it compulsory for any potential service provider to produce a municipal services rates compliance certificate prior to being awarded a government contract.
• Resolving municipal debts to Eskom: Nkadimeng said that the municipal debt to Eskom continues to rise without any improvement and the debt owed to municipalities by customers, including organs of state, is also still rising sharply, and this will worsen due to the impact of Covid-19.
Only 11% of 257 municipalities received clean audits and the Auditor-General, Kimi Makwetu, earlier said control systems should be implemented.
Nkadimeng said poor management and a lack of accountability are also to blame for the mess most municipalities find themselves in. Despite the AG’s findings, those guilty of violations and transgressions have not been held accountable, she concluded.
Story: Nelie Erasmus