25 April 2019

25 April 2019

STATEMENT BY BRETT HERRON, GOOD SECRETARY GENERAL

SKEWED JOHANNESBURG RATES: unfair for ordinary homeowners to subsidise large corporates.

GOOD has approached the City of Johannesburg Integrity Commissioner to investigate a possible conflict of interest for the Executive Mayor.

Public Protector agrees to investigate.

 

While Johannesburg homeowners are being asked to cough up significantly more in municipal rates each month, in accordance with the actual market values of their properties, large corporates continue to receive massive discounts, an investigation into the city’s rates valuation process has revealed.

Among the major beneficiaries of rates under-valuations are several of South Africa’s largest companies, allegedly including Growthpoint, a company closely associated to Johannesburg mayor, Herman Mashaba, and his wife, Mrs Connie Mashaba.

The findings of the investigation by a whistle-blower, who has investigated municipal rates anomalies in South Africa for many years, have been submitted to the Office of the Public Protector in Johannesburg. 

Yesterday, the Public Protector confirmed that she will investigate the complaints.

The under-valuation of commercial properties in the City of Johannesburg appears to have a long history – including during the period it was governed by the ANC.

This practice was brought to the attention of the then newly elected DA-led government in November 2016 through a presentation to the Executive Mayor’s Office. 

Due to the failure of the City of Johannesburg, and the Executive Mayor, to take any action over the past two-and-a-half years a duplicate dossier was submitted to GOOD with a request that we assist.

This is because of an apparent conflict of interests for the Executive Mayor Herman Mashaba.

In 2006, and through a Black Economic Empowerment transaction, Mashaba is alleged to have become an indirect beneficiary of this practice through the shareholding in commercial properties of the Herman and Connie Mashaba Trust.

I have written to the City of Johannesburg’s Integrity Commissioner, Advocate Rampai, with a request to investigate the alleged conflict of interests (see attached).

If municipalities are saying that property owners should pay rates based on the actual values of their properties it is totally unfair and unjust to apply this rule to struggling homeowners while favouring large commercial property owners with property rates breaks.

According to the whistle-blower, Johannesburg could be earning an additional R1,5 billion a year if it taxed commercial property owners in the same way it is taxing private homeowners – based on fair market values.

The City of Johannesburg is presently concluding a rates re-evaluation process (now in the objections phase).

It is another example of a DA administration’s de-prioritisation of the creation of a fair society and inclusive communities.

According to the whistle-blower, if rated at real market values, Growthpoint, alone, would have to pay nearly R200m more in annual rates to the City of Johannesburg. 

This is not just a DA problem. The ANC took much the same approach while in charge of Johannesburg, famously de-valuing the Gupta compound in Saxonwold from R17 000 000 (R17 million) to R490 000, and therefore charging that family just R157 per month in municipal rates.

With South Africa under increasing pressure to narrow the widening gap between rich and poor citizens, tax breaks for corporates are counter-productive and make no sense.

Corruption is not just the astounding cash transfers we are seeing exposed through the State Capture Inquiry testimony.

Global anti-corruption organisations have started to identify urban land as a new currency for patronage.  

Governments and political parties that commit to clean government must be able to demonstrate that they will also act on this form of corruption. 

ENDS.

See attached: Letter to the Integrity Commissioner & Schedule of potential rates income losses

https://www.scribd.com/document/407472104/GP1-GROWTHPOINT-vs-City-Valuations-R192million-Rates-Underrecovery

https://www.scribd.com/document/407472137/Letter-to-CoJ-Integrity-Commissioner-GOOD-Commercial-Property-Rates

Cameron Arendse