The legal instruments to raise property rates: Policy, by-laws and resolutions

Abstract

The Constitution empowers municipalities to generate revenue through the levying of property rates and the charging of service fees. The Municipal Systems Act and 1 the Property Rates Act2 regulate these revenue raising powers by prescribing, inter alia, the use of certain legal instruments, namely policies, bylaws and resolutions. Each of these instruments performs a specific function within this statutory framework. Practice shows, however, confusion regarding the function of these revenue-raising instruments. A number of municipalities are levying rates largely based on their property rates policy, and not on a by-law, which makes their entire property rates regime suspect. The failure to properly apply these instruments may pose considerable risks for municipalities as their revenue-raising powers may be fatally flawed. This paper will examine this issue in the context of property rates, one of the main sources of municipal revenue. In the first part of the paper a legal interpretation of the differing functions of policies, by-laws and resolutions will be outlined. In the next section the practice of municipalities with regard to the use of these instruments in the context of property rates will be examined, showing that practice in some municipalities is at odds with the legal framework. In the final section some recommendations are offered to address the problem.