Double whammy for ratepayers

Ratepayers are charged VAT for water availability, sewerage and its availability, refuse removal, and electricity.
File picture: Deneesha Pillay

But metro bosses vow to consider VAT hike when raising municipal tariffs

Ratepayers should brace themselves for a double blow of hikes on their municipal accounts this year, with the VAT increase set to affect all bills from April, while the annual tariff increases come into effect three months later.

But Nelson Mandela Bay city bosses have assured residents they will take into account the effects of the one-percentage-point rise in VAT when drawing up the budget for the next financial year, which comes into effect on July 1.

Ratepayers are charged VAT for water availability, sewerage and its availability, refuse removal, and electricity.

This is over and above other daily expenses experienced by the ratepayer for food, clothes and transport costs which will also go up.

Finance Minister Malusi Gigaba announced on Wednesday that VAT would increase from 14% to 15% from April 1.

Explaining the impact of the announcement on the city’s finances, budget and treasury political head Retief Odendaal said the municipality would have to limit the tariff proposals for the 2018-19 financial year.

“Cognisance must be taken that there is an additional burden which obviously will have an impact [on] the cost of the monthly average bill,” Odendaal said.

“The reality is that we have to factor in that there’s already an increase [and] it’s going to put us under more pressure.

“That will have a direct impact on our ability to increase our tariffs.

“Because of this increase, our own tariffs will be under more pressure because we have to try and ensure they are affordable to our own consumers,” he said.

“If you are paying R100 for your water tariff, it would’ve been R114 – now it will be R115.

“Although it looks like a relatively low increase, one percentage point does have an effect and it puts the municipality under pressure to try to limit its potential increases even further to try and accommodate this increase.”

In an attempt to help residents who might struggle to pay their municipal bills, Odendaal said the city’s Assistance to the Poor policy would be reviewed.

He said they would ensure that pension and disability rebates were competitive compared to other cities.

Ratepayers’ association chairman Kobus Gerber said the increases were necessary.

“We all know that businesses in PE are very cash-strapped and it has an effect on our economy and job creation.

“I know for a fact the DA is doing everything in its power to try and rectify the infrastructure [issues],” Gerber said.

“These increases are concerning but we hope they [DA] put their money where the mouth is and use the money wisely to uplift communities.

“The country is sitting in a Catch-22 situation, but we must give [President Cyril] Ramaphosa the opportunity to try to undo the wrongs.

“Unfortunately, everybody has to bite the bullet for now.”

He was, however, concerned about the effects on the Bay economy.

He said he was more concerned about the consumers than businesses.

“Yes, it will have an effect on businesses but the actual person who is going to be affected is the man in the street,” he said.

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