City scraps ‘road tax’
City of uMhlathuze has - for now - done away with its controversial 'road tax' policy after a decision taken at last week's Executive Committee sitting
THE City of uMhlathuze has – for now – done away with its controversial ‘road tax’ policy after a decision taken at last week’s Executive Committee sitting.
Officially known as the ‘Policy for Engineering Service Contributions for Roads and Storm Water’, when debated publicly in late 2015 the policy came under massive condemnation from the business and private sector as a deterrent to investment.
The tax, abbreviated to ‘Road Contribution Policy’, entailed a levy not only for developers and new business owners, but also for those who rezone existing properties, the latter regarded as ‘enhanced land use rights’ or ‘exceeding the original consent use applications’.
The policy was extremely burdensome, the sums levied on new developers to use existing roads at times amounting to six-figure amounts.
Even the conversion of a private home to, say, a small crèche or home school would involve a R200 000 up-front payment to the municipality.
In the case of housing projects, factories or large industries, the tax amounted to millions.
U-turn
At the time, the city – the only municipality in KZN to implement the policy – defended it, saying it was either that, or raising the rates and tariffs to well above the majority of households’ affordability levels.
In addition, the municipality was ensuring that monies from land sales would no longer be used to subsidise services, but instead be strictly confined to building up capital reserves.
However, the Exco decision effectively conceded that the policy was unfair, not equitable and inadequately implemented and that the road contributions were deemed ‘too high and an impediment to investment’.
Among other shortcomings noted by the Infrastructure Services Department, an indication of the failure of the Road Contribution Policy is that since it was first mooted in 2010, only R3.7-million has been generated in levies.
The recommendations approved by Exco include:
The Road Contribution Policy be suspended for a period of three years;
A report be submitted to Council, and once national legislation on the matter has been tabled in parliament (scheduled to be gazetted on 30 June 2020), the matter will be revisited;
In cases where applicants have already paid road contributions, these will not be refunded;
In cases where an applicant has not yet paid road contributions, these will be waived;
Any developer that submits a land development application will be required to provide professional traffic impact assessments and to implement the findings.
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