Court puts municipality in its place

A court case that most South Africans probably scrolled past this month deserves a lot more attention than it got. On 30 April 2026, the Western Cape High Court ruled that Cape Town’s fixed charges for citywide cleaning, water and sanitation were unlawful and unconstitutional. TheSouth African Property Owners Association(Sapoa) brought the case and won.

The city has since decided not to appeal, which tells you everything you need to know about the strength of its legal position. The issue was that Cape Town had structured the fixed service charges so that the amount you paid was calculated based on your property’s value. The more expensive your property, the more you paid for cleaning and basic water, regardless of how much water you used or how much rubbish you generated.

The court found that linking a service charge to property value converts it into a property tax in disguise. Municipalities don’t have the legal authority to introduce new property taxes. That power sits with the national government.

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What looked like a service charge was, legally speaking, an unlawful levy. The city is scrambling to rework a budget that depended on roughly R2 billion in revenue from those charges. A new draft budget goes out for public comment on 27 May 2026.

Sapoa has said citywide cleaning should be funded through property rates, the mechanism that exists for broad-based municipal expenditure. The city appears to agree. Why does this matter beyond the Western Cape?

The ruling is a mirror being held up to every municipality in the country. Municipalities have a problem and it is one that few are willing to talk about honestly. They are over-reliant on a small group of people to fund their budgets — property owners.

Property taxes and rates make up a disproportionate share of municipal income in most of our major cities. When you add surcharges and service fees that get stacked on top of rate bills, a significant portion of what municipalities collect comes from the same pool of ratepayers. That is not a sustainable funding model and it creates a political temptation that is almost impossible to resist.

To put it another way, if you need more money, you look at property owners because they’re paying, their properties are registered and they’re relatively easy to bill. Cape Town’s value-linked charges were a version of that temptation. Instead of going through the proper legislative process to increase rates, which requires alignment with the national framework and public consultation, the city found a creative workaround.

Link the service charge to property value, collect more from higher-value properties and achieve the revenue outcome without technically calling it a rate increase. The court said no. Here is what the data tells us about the broader problem.

According to research compiled from the National Treasury’s local government data, property rates as a share of municipal operating revenue have climbed steadily over the past decade. In the metros, rates income has in many cases grown faster than inflation — and significantly faster than the property values being taxed. The City of Cape Town’s budget shows rates income growing at compound rates that have consistently outpaced CPI.

The same pattern holds in Johannesburg, Tshwane and eThekwini, where property rate increases have run between 8% and 12% annually, even during periods when inflation was at 4% or 5%. For property owners, this is not an abstract policy conversation. It lands on your doorstep in the form of a municipal account that seems to grow faster than almost anything else in your cost of living.

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