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Monday Mar 03, 2014

Property taxes come under scrutiny

The SA Property Owners Association (Sapoa) is pushing ahead with a pivotal initiative to lay bare the current property tax regime in South Africa, with the appointment of Business Enterprise at the University of Pretoria in partnership with specialist consultants Rates Watch.

'The prevailing level of and the increases in property taxes throughout South Africa in recent years continues to be of concern to the commercial and industrial property industry,' says Sapoa's chief executive Neil Gopal. 'For that reason, we are taking a strategic and proactive approach to identifying, collecting and analysing core data on property taxes so we can best inform our members and our efforts as an advocate for the sector.'

The project focuses on generating empirical and credible information on several key questions of interest. One is the constitutional implications of municipal property tax decisions; another is the consequences of the Rates Act 2004 in ensuring municipalities correctly set property taxes.

Sapoa has asked the researchers t o assess the impact of property rates relative to municipal funding models and the market- related value of properties.

Best international practice will be examined as part of the scope of work, to set a benchmark for South Africa.

'The key outcome from Sapoa's perspective is a set of recommendations that can be effectively used to influence policymakers on issues relating to setting and imposing property taxes,' says Gopal.

Given the gravity of the property tax situation in South Africa, Sapoa is taking a multipronged approach to unearthing facts about property-related municipal costs.

Sapoa last month also appointed Rates Watch t o undertake a comprehensive investigation into municipal budgets and the policies and legislation that underpin them.

'The two initiatives dovetail and it makes sense to conduct them in parallel. Since the property sector contributes significantly to the rates base, we intend to find out everything we can about property taxes and their impact on our sector.'

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