Republic of South Africa

Article excerpt

GODFREY R. A. DUNKLEY [*]

THE REPUBLIC OF South Africa (RSA) is among the world leaders in collecting municipal or local government revenue from the capital value of land. Looking at the country as a whole, some 70 percent of city revenue has been collected by site-value rating where there is no revenue collected from improvements. For the remainder, a larger portion has come from land values than from improvements, with only two major cities collecting an equal percentage from both land and improvements, i.e. flat rating.

For the most part, there is a distinction between rates and services. Services are normally charged as close as possible to cost and capital replacement/amortization, and contribute little towards general municipal revenue or expenditure. However, there has been a major upset to this principle in recent years because of political agitation and the growth of a new culture of non-payment. This has reached serious proportions to the extent that the central power supply authority, Eskom, has at times been forced to cut off power supplies to large areas. Local authorities have also cut off water supplies, and are threatening to do so again. Many local authorities are effectively bankrupt and this could affect current thinking on municipal revenue systems.

There has been a strong move towards redistribution of land and restitution of land rights that were taken away from large numbers of people during the days of the apartheid policy of moving blacks from white areas to black homelands. Much of the confiscation is being reversed by court decisions, and the Ministry of Land Affairs is working towards introducing a land tax in rural areas. This tax is being opposed by all farming organizations.

With the above overview of present conditions in the RSA, it may be useful to go back to some of the earlier history of land taxation in the country.

I

History of Land Taxation

SOUTH AFRICA HAS a long history of collecting a portion of land rent as revenue. In 1652, the Dutch East India Company asserted its right to the land in the western Cape. Under Jan van Riebeeck, the settlers had only tentative rights to the land at the discretion of the governor, for which they paid a land tax or quitrent, according to the agricultural quality. In 1714, a fee of twelve riksdollars per annum was charged for grazing land, and a tithe of one tenth of the crop for sowing land. In 1731, farmers were allowed to register land in erfpacht for fifteen years with an annual payment of twenty-four riksdollars for a sixty morgen farm. Some were later converted to freehold with a minimum payment of twenty-four riksdollars per annum plus an additional amount on the more valuable farms, to be assessed by officials.[1]

Sir John Cradock introduced perpetual quitrent in 1813, allowing holders of land on loan to establish security. The maximum size of a farm was to be three thousand morgen and the annual fee not to exceed two hundred and fifty riksdollars, but this could be increased at a later date.[2]

As the Boer farmers gradually migrated to the east in later years, the British government followed with a demand for land tribute which resulted in the Great Trek into the hinterland, namely the Orange Free State and the Transvaal, where for a while they were free. With the establishment of both these territories as republics, farms were laid out on the principle of putting in four pegs during a one hour gallop on horseback. "First come" got the best land. Their payment was rent in the form of service, that is, the provision of one man, one horse, and one rifle when needed to preserve the peace or defend the land. As in Europe, this service gradually gave way to other forms of taxation.

After the establishment of the Union of South Africa in 1910, most municipal ratings were based on the total value of both land and improvements. At that stage, the Labour Party of South Africa included the taxation of land in its manifesto. …