Revenue collection challenges in the cities of Johannesburg and eThekwini

Abstract

ABSTRACT Metropolitan municipalities in South Africa are expected to generate their own revenues from property rates, service fee surcharges and other taxes, levies and duties from local residents and businesses. Rural and district municipalities, however, still place greater reliance on national government grants due to a large proportion of poor people residing in those areas. “Own” revenue constitutes a significant proportion of the metro‟s total revenue and is critical for the development of the area. This situation has a serious impact on the potential for socio-economic development and service delivery to the local communities. This study therefore seeks to investigate the revenue collection challenges facing metropolitan municipalities in South Africa. The report compares the City of Johannesburg (CoJ) and eThekwini, the two largest metros in South Africa. What makes the comparison interesting is that the City of Johannesburg received a “qualified audit report” and eThekwini an “unqualified audit report” for the 2010-11 financial year. It is a serious concern when a big metro like the City of Johannesburg (CoJ) viewed as the “economic hub of Southern Africa” receives a qualified audit report. The key findings from the research is that the metros face challenges regarding incorrect data loaded in the municipalities‟ billing systems, the costs attached to the provision of free services to indigent people, a culture of non-payment of municipal services, and illegal connections of water and electricity.