Cape Town keeps rates hike below inflation ... then along comes Eskom
My rates bill was a rare and pleasant surprise, until the power factor switched off my optimism
It’s not often that the cash-strapped middle-class consumer gets a pleasant financial surprise, but it happened to me on Thursday when the City of Cape Town unveiled its draft budget for 2019/20.
A few minutes of scrawling on the back of my last rates account revealed that from July 1 my bill will rise by only 2.84%. (This excludes the cost of electricity. I have a prepaid meter, so electricity only features on my rates bill in the shape of a home-user charge.)
On the face of it – and assuming the draft budget doesn’t balloon by the time the council votes on it – that is a much lower increase than I’ve experienced this year for other big-ticket items on the family budget, such as medical aid premiums, university fees and food.
It is one of the few increases I can remember in recent years that makes the inflation rate (4.1%) look vaguely realistic. But it is still well above the pay increase I received this year (0%).
Calculating rates bills in Cape Town from July 1 is complicated this year by the simultaneous revaluation of properties, something the city council does every three years (and hopes to do annually).
The value of my house has increased in value by 32% since the last valuation exercise. As far as the council (not necessarily the market) is concerned, it is now worth R3.3m, compared with R2.5m three years ago.
The council says Cape Town’s 875,000 residential properties increased in value by 34%, on average. In itself, this does not propel rates higher because the council has reduced the proposed rate in the rand by 22%, from 0.7154c to 0.555c.
It has also adjusted its rebate formula, and the net effect is to give householders R300,000 worth of their valuation “rates free”, up from R200,000 in the current year.
Going through my latest rates bill line by line, this is how the increases will stack up:
Rates: Up from R1,372 to R1,404.98.
Statutory rebate credit: Down from R8.23 to zero, because this credit has been abolished.
Additional rebate credit: Up from R101.53 to R127.73.
Total rates bill: Up from R1,262.24 to R1,277.25.
Water: Up from R104.29 to R113.63, based on consumption of 7kl, or 250 litres a day.
Fixed basic water charge: R100 (unchanged).
Total water bill: Up from R204.29 to R213.63.
Refuse: Up from R126.26 to R132.57.
Sewerage: Up from R64.15 to R69.91.
Electricity home user charge: Up from R130.44 to R142.02.
VAT: Up from R78.77 to R83.72.
Grand total: Up from R1,866.15 to R1,919.10.
Deputy mayor Ian Neilson, also the mayoral committee member for finance, said the city proposed to limit its electricity price rise to 8.88%, even though Eskom’s bulk price is going up by 15.63%. That will add about R220 to my monthly bill of R2,500.
All in all, then, I will be handing R4,639.10 a month of my shrinking salary to the city council. And to put an end to my initial optimism, this turns out to be 6.25% more than my current bill (thanks, Eskom).
So much for a below-inflation increase.