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Municipal accounts ‘show extra tax’

05 December 2012   (0 Comments)
Posted by: SAIT Technical
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By Ethel Hazelhurst (Business Report)

Executive summary (SAIT Technical)

The medium-term budget for local governments (municipalities)showed that, in the current fiscal year from July 2012 to June 2013, revenue is budgeted at R264 billion, while expenditure is set at R281.2bn. The shortfall of R17.2bn is to be funded by the borrowing of R9.6bn – and internally generated funds of R7.2bn – leaving a deficit of R373 million. Surpluses of R2.1bn and R3.1bn are projected in the two years that follow.

Full article

THE medium-term budgets for local governments, published by the National Treasury yesterday, reveal the extent of additional taxes on households and businesses, according to Mike Schussler, the chief economist at Economists.co.za.

"The main focus of public attention is on revenue and expenditure by national and provincial governments, contained in the annual Budget in February and the medium-term budget policy statement in October,” he said. "People don’t realise these figures are not the full picture.”

The operating and capital budgets for 278 municipalities showed that, in the current fiscal year from July 2012 to June 2013, revenue is budgeted at R264 billion, while expenditure is set at R281.2bn. The shortfall of R17.2bn is to be funded by the borrowing of R9.6bn – and internally generated funds of R7.2bn – leaving a deficit of R373 million. Schussler said this deficit was funded by national government transfers.

In the two years that follow, surpluses of R2.1bn and R3.1bn are projected. Much of the local governments’ revenue is in return for services rendered, such as water, electricity and waste disposal, but Schussler said local governments imposed huge mark-ups to compensate for their inability to collect money owed to them.

An example, he said, was the 74 percent gross profit margin on electricity. "No firm could get away with adding 75 percent to the prices. The big mark-up amounts to another tax.”

Operating and capital revenue for the City of Johannesburg is projected at R40.6bn this year, for Cape Town R33.2bn, and eThekwini R31.8bn. Johannesburg’s operating and capital expenditure is budgeted at R36.6bn, Cape Town at R25.4bn and eThekwini at R29.1bn.

Cape Town and eThekwini have the largest capital budgets at 3.6 percent and 3.2 percent of the aggregated capital budget for metros. They are followed by Johannesburg and Tshwane, each at 2.6 percent.

When Ekurhuleni is benchmarked against the mentioned metros, its capital appropriations appear small at a mere 1.6 percent in 2012/13, decreasing to 1.4 percent by 2014/15.




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