January 12 is the deadline for Cape Town residents to comment on the City of Cape Town’s proposed water levy. Cape Town Business Chamber said on Wednesday that the deadline is way too soon, as most people would still be on holiday.
The levy will be based on property values and the money generated would fund water augmentation schemes. The Organisation Undoing Tax Abuse (OUTA) regards such an additional levy for water as “illegal” and plans to challenge it this month.
Chair of the chamber, Karin Pickard Louis, said Cape Town’s water crisis raises a few issues that need to be discussed in context.
She said that the provision of bulk water, through dams and other collection and storage mechanisms, is the responsibility of the national Department of Water and Sanitation.
“Like many of the national departments, it is legendary for its incompetency and lack of strategic thinking and it did not anticipate [the consequences] of the drought nor make any plans to address it,” Pickard Louis said in a statement.
“But the City of Cape Town is now left with the problem of not having enough water in the dams to meet the needs of the population. D-Day – when the taps dry run – is now predicted to be at the end of April.”
She said that the gradual introduction of the water restrictions as the hope for heavy winter rainfall faded, reduced water consumption gradually, but created operational problems.
The tariff structure for water included the first six kilolitres free. The cost per kilolitre of water used increased according to the stepped block in which the usage fell.
When the restrictions came around, they obliged every household to limit their monthly consumption to three kilolitres per person. The ‘free allowance’ was then not sustainable and was removed in the latter part of 2017, according to Pickard Louis.
However, this did not resolve budget issues for the City, as overall income plummeted as consumers complied with the usage restrictions – the current income shortfall is around R1.7bn for the year as costs have remained the same.
In Pickard Louis’ view, the “water shortage levy” is essentially to meet the City’s current income shortfall.
She said that every budget must undergo a public comment process, and that is what is currently in the public domain.
She said National Treasury still has to confirm whether it will allow the City to raise the additional revenue of R1.7bn and incorporate it into its budget for the current year. She thinks that it’s likely that the City will incorporate the additional revenue to be raised into the budget for the current year due to the legal implications if it does not.
“Whether a groundswell of opinion against the charges will have any impact is debatable, given that the City is legally obliged to balance its budget and if it can’t cut costs it must increase revenue. That is the requirement under national legislation.”
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