LETTER: Bring back those RSC levies

Much has been said and written about the equitable share allocated to local government by the National Treasury. There seems to be consensus among local government practitioners and politicians alike that the 9% equitable intergovernmental grant municipalities get yearly is hopelessly inadequate.

Municipalities can raise revenue only through rates (property taxes), service fees and charges for provision of services such as electricity and refuse collection.

Many rural municipalities do not have the capacity to raise significant amounts and depend solely on intergovernmental grants. The failure of provincial and national governments places exorbitant pressure on municipalities.

Recently the uMngeni municipality was required to assist residents of Nottingham Road by unblocking stormwater drainage along the R103. The R103 is a provincial road and so the responsibility of the KwaZulu-Natal transport department. But due to the department’s nonresponsiveness, the municipality was required to use its own resources to deliver services that another sphere of government is responsible for providing.

That the KwaZulu-Natal transport department was allocated R12.4bn for 2022/2023, not to mention that in the 2019/2020 financial year it underspent its budget for transport infrastructure by R1.9bn, leaves a sour taste in one’s mouth. For some context to the above figures, uMngeni municipality’s entire budget for 2022/2023 is R500m.

The above is just one example of inefficiencies of other spheres of government that forces local government to pick up the slack. Many other departments and state-owned enterprises fail in this regard, but rather than dwell on that I want to offer a viable situation to the current local government funding model.

Until July 2006, metro and district municipalities could raise revenue through regional services council (RSC) levies. These consisted of the regional services levy (a small percentage of the aggregate payroll of all businesses in a municipal jurisdiction) and the regional establishment levy (a small percentage of the turnover of these businesses).

Before national government scrapped RSC levies, they made up 9% of total local government revenue in the 2003/04 financial year. Legislators should strongly consider reintroducing RSC levies, with the amendment that only category A and B municipalities may raise revenue through this mechanism. 

Sandile Mnikathi, Deputy mayor, uMngeni municipality

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