The country’s municipalities are facing financial issues, and Government’s Financial and Fiscal Commission is proposing a number of “local government” taxes to address these issues.
A proposal document published in March stipulates that some of these taxes, if put in place, will be undertaken by property owners and may form part of their utilities bill.
According to the Commission, these taxes are common in other countries, and are used in cities such as Paris, Barcelona and New York.
The taxes it proposes include the following:
– Development charges;
– Weigh-in bridges in mining areas;
– Advertisement levies;
– Fire levies;
– Amusement taxes;
– Hotel taxes
“Local governments across the globe also impose a mix of small levies, such as advertisement taxes, hotel/occupancy taxes, fire and drought levies, amusement taxes or construction taxes,” the Commission said. “Hotel or occupancy fees and tourism fees often assume a value-added sales tax on the hotel bill. Amusement taxes and advertisement taxes are charged on admission to amusement parks and on the use of signboards, respectively.”
A fire service fee is a levy that is imposed on property rates or on insurance contracts. “In the former case, it is only paid by those who insure their properties while in the latter case, it is paid by all ratepayers. These taxes generate little revenue due to the seasonality of the services being taxed. For rural municipalities, tourism levies can be a significant source of income, while urban municipalities benefit from advertisement, hotel and construction taxes.”
The above tax proposals are aimed at local governments, but government may be considering the introduction of a wealth tax at national level.
These taxes may be imposed at the recommendation of the National Treasury, as Government seeks to raise an additional R40-billion in the coming years.
“We are looking at these recommendations. It is important to remember that tax amendments over the last five years have included some of these proposals and we are looking at additional proposals for the 2021 budget,” said Chief Director of the National Treasury Edgar Sishi to BusinessTech.