Government Set To Drain More Money For Drought Levies

Cape Tonians can expect to pay the government more money from next year. How do you feel about paying a drought levy?
U
Melissa
Cohen
Published: Monday, December 18th 2017
General
The Western Cape has yet again sounded the alarm on the current water crisis. This time, the government have announced that citizens will pay a drought levy. This comes into full effect from February, if approved by the National Treasury. In addition to this, from January 1, 2018, the government will be implementing level six water restrictions. So what will this drought levy mean for you? We find out...
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What Is A Drought Levy? 

The City is currently facing a serious problem with the possibility of Day Zero being imminent. Businesses and residents have been rationed to a quota of water per month. Since the implementation of Level 5 water restrictions, the City's water consumption has decreased, however not enough. This has called for the possible implementation of a drought levy. According to Mayoral Committee Member for Finance, Cllr Johan van der Merwe, the City isn't making enough money. The money that the City normally gets for water usage has declined- this decreasing the City's income to finance infrastructure.
"This is income we need to fund projects to make additional water available, and to carry out maintenance on our infrastructure. Please remember that the cost of maintaining infrastructure to supply water remains the same no matter how much water is consumed. As such the City is introducing a drought charge to make up the revenue shortfall during these unusual times."

How Does The Drought Levy Work? 

The levy is currently in the process of being approved, however once the Minister of Finance and Council approves it, it will come into effect from February 1.  The levy is expected to remain in place until 2021 in order to assist the funding of new water projects. The City is expecting to raise R1 billion per year in funds for their projects through drought levies. Each home owner will be expected to pay a levy each month that is dependent on their property value.
"The drought charge is based on property value and is estimated at about 10% of the current municipal rates portion of residents’ municipal accounts. Residential properties valued under R400 000 and commercial properties valued under R50 000 will be exempt from the charge. All other property owners will be expected to pay the charge," explains Van Der Merwe.
This levy will be included in the monthly rate accounts of residents and depending on the owner, if the place is rented, the tenant may be required to pay.

How Much Is It?

This table shows the expected maximum charge against the valuation reflected. These are not bands of charges, but indicative examples.

Residential property valuation (without rebates)

R

Suggested monthly drought charge

Commercial property valuation

R

Suggested monthly drought charge

R

Less than 400 000 R0 Less than 50 000 R0
400 000 R25 50 000 R10
600 000 R35 500 000 R60
800 000 R45 750 000 R85
1 000 000 R60 1 000 000 R115
2 000 000 R115 2 500 000 R280
3 000 000 R170 5 000 000 R560
4 000 000 R225 10 000 000 R1 120
5 000 000 R280 15 000 000 R1 680
6 000 000 R340 20 000 000 R2 240
7 000 000 R420 30 000 000 R3 360
10 000 000 R565 50 000 000 R5 600
20 000 000 R1 120 100 000 000 R11 200
50 000 000 R2 800 500 000 000 R56 000
According to Van Der Merwe, the City will keep their financial reports open and available for public scrutiny. This is to ensure that citizens know where their drought levies are going to.

What Does Level 6 Restrictions Entail?

The City has announced that Level 6 water restrictions will be implemented from January 1, 2018. This means that households using more than 10 500 litres per month could face fines. Water restriction metres will also be installed in households that exceed the limit. Non-residential properties are expected to reduce their water consumption by 45% compared to the corresponding period in 2015. While agricultural users are required to reduce water consumption by 60%. The City has discouraged residents from using borehole water for outdoor purposes. This ensures that these resources are conserved.
*For more information on Level 6 water restrictions and drought levies, click here.
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