There appears to be a growing trend for municipalities to change their property pricing policies to allow them to charge game farms on a commercial scale rather than an agricultural scale.
In Mangaung, the latest to propose such a change, it means game farm owners will pay 15 times more from July 1, if the proposal passes.
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It will be devastating, says Richard York, CEO of Wildlife Ranching SA.
Opportunity to engage
Municipalities are currently busy with public participation processes regarding their annual budgets, which include pricing policy for the coming year.
If such proposals are not challenged now, it will be difficult for taxpayers to do anything about them later, says Ben Espach, director of valuations at Rates Watch.
Although the focus during the budget process is on the level of rate increases, seemingly small changes in land rate policy can have disastrous consequences for landlords, says Espach.
It has studied tariff policies proposed by several municipalities and submits comments on behalf of the South African Property Owners Association (Sapoa).
Espach points out that game farms are already classified as businesses for property rate purposes in Buffalo City.
Dispute declared in Thabazimbi
Farmers in the local municipality of Thabazimbi have been struggling with the same thing for some years, says Jacques Blaauw, who chairs a forum of community organizations that negotiate with the council over the issue.
In this case, the municipality snuck in the change a few years ago after the end of public consultation – meaning the owners affected had no chance to object.
Blaauw says property classified as agricultural is taxed at a quarter of the residential rate, while commercial property is assessed at twice that of residential property.
The affected owners have declared a dispute with the municipality which has not yet been finalized.
In one example, says Blaauw, a 1,000 hectare farm that paid R7,500 last year under the agricultural classification, which also qualifies for some discounts, would have been liable for R93,000 if classified as a business.
What the law says
Blaauw says municipalities are relying on the fact that the Local Government Property Rates Act excludes ecotourism and game farming from the definition of farmland – but forget that the law also requires rationality when determining the rate, and that the rate must take affordability into account .
Drought conditions as well as the impact of Covid-19 have had a severe impact on game farm revenues, and owners will simply be unable to cope with such large increases.
He says municipalities can help particular classes of property like game farms through rebates, reduced rates or exemptions.
Thabazimbi council agreed to a 30 per cent discount – but even with that being taxed as a business is unaffordable for game farms, he says.
Service delivery, market pressure double whammy
Rudie van Zyl, owner of Klipfontein game farm near Northam, says he pays the municipality of Thabazimbi R433 per month in accordance with agricultural tariffs – but receives absolutely nothing in return.
He says area farmers even had to step in to maintain the town’s landfill.
Van Zyl adds that an American hunter would pay R30,000 for a kudu bull with 60 inch horns. Due to the impact of Covid-19, however, foreign hunters are few.
The alternative is to sell the animal to a local butcher for meat, but this only brings in around R3,000.
He says it’s just not possible to pay multiples more for real estate rates.
Blaauw says with the dispute in Thabazimbi dragging on for years, game ranchers who are still paying for their property as if it were classed as farmland are so behind with their land rates that they will have to sell their farms to pay. bills unless there is some relief.
Mike Schüssler, economist at economics.co.za, says municipalities are increasingly trying to extract more money from law-abiding citizens because they have no control over their spending.
They fail to collect consumer debt and try to get more from those who are still paying.
This, says Schüssler, kills the economy.
Listen to Suren Naidoo’s interview with Sapoa CEO Neil Gopal in this episode of The Property Pod (or read the excerpts here):