adminSince the adoption of the multi-currency system in February 2009 residents had been failing to pay their property tax, levy and other dues to councils and had accumulated huge debts. Councils had resorted to carrot and stick tactics in some cases offering discounts whilst in others attaching residents’ property. During his star rallies President Mugabe vowed to stop councils from attaching properties from hard-pressed residents.
Outgoing local Government, Rural and Urban Development Minister Dr Ignatius Chombo directed that all councils should cancel outstanding debts owed by individual ratepayers a few days after.
Losing a property to council is not in the public’s interest and goes against public policy which is to provide housing for all residents.
While the councils can cry foul that they have been caught offside, their service delivery standards were so poor that they did not justify the money they were charging ratepayers. In addition, councils were being accused of having used dubious exchange rates when they converted Zimbabwe dollar balances into US dollars.
Property owners should ensure that this cancellation is reflected in their next statement and bills.
Whilst the move may seem populist election fever policy it was the most prudent thing to do under the circumstances. These were effectively bad debts and the councils were adopting increasingly draconian measures against residents.
It must be noted the rates debts issue only arose after the dollarisation which clearly shows residents had been incapacitated due to the economy-wide cash crunch in other words this wasn’t wilful default by residents.
The debt forgiveness and subsequent cancellation cannot be called a vote-buying gimmick because this applies countrywide which means every Zimbabwean including MDC-T, MDC-N, Zapu or Zanu members benefit.
This is pure public finance policy at work whereby you can’t select beneficiaries.
A property tax is a levy on property that the owner is required to pay by law. The tax is levied by the governing authority of the jurisdiction in which the property is located.
It may be paid to a national government, a federated state, a county/geographical region, or a municipality. Multiple jurisdictions may tax the same property. Rates vary across the states, between about 0,2 percent and 4 percent of the home value.
The assessment is made up of two components — the improvement or building value, and the land or site value. The property tax is the main tax supporting local education, police/fire protection, local governments, some free medical services and other local infrastructure.
In Zimbabwe the Minister of Local Government is the final authority on rates, levies, rents, fees that are due to local authorities even though councils may run the city on a day-to-day basis.
At a Zanu-PF rally in Mabvuku-Tafara constituency in Harare, Minister Chombo said the directive was irreversible and assured residents that the debts would not appear on their bills.
“It is according to the law and there is a law that permits us to write off debts. We have since instructed councils to do so,” he said.
The directive followed complaints by residents’ associations over arrears caused by unjustified increases in rates and bills by MDC-T-led councils, especially in urban areas. Minister Chombo recently told a Press conference that he had dispatched circulars to the local authorities informing them of the policy line which read: “In terms of Section 133 of the Rural District Councils Act Chapter 29:13 as read with Section 303 of the Urban Councils Act Chapter 29:15, councils are directed to write off debts in respect of rentals, unit tax, development levy, refuse charges and water and sewer fees as at 30 June, 2013.
“Similarly, amounts owed by residents in respect of rates since February 2009 stand prescribed in terms of Section 15 of the Prescription Act Chapter 8:11.”
Minister Chombo urged Zesa Holdings and the Zimbabwe National Water Authority to follow suit to bring relief to the people whose livelihoods were destroyed by sanctions over the past decade. It remains to be seen if such a dramatic windfall can be extended to Zesa and Zinwa.
Vice President Joice Mujuru and First Lady Amai Grace Mugabe concurred and said the directive was not a political gimmick but a move meant to cushion people from the economic hardships they face as a result of the illegal sanctions.
Addressing thousands of Zanu-PF supporters in Bindura recently, VP Mujuru said the debts accrued by residents were unjustified and accumulated at a time the country was suffering from the sanctions, illegally imposed on the country by Western countries.
“The fact that the directive coincided with the harmonised elections does not mean that it is a political gimmick,” she said.
“Ndozvamakaita paminda vamwe venyu muchiti ipolitical gimmick mukabva masara nhasi maakutinetsa muchida minda iyoyo.
“Minister Chombo, in announcing the decision, took the law into consideration and this is a move meant to assist our residents to come out of this mud,” said VP Mujuru.
While addressing Zanu-PF supporters in Norton, Amai Mugabe said people were failing to pay for the bills because of the poor performance of the economy.
She said using foreign currency was not an ideal option although people were forced to switch to foreign currency in 2009.
Considering the high level of officials who have publicly endorsed and confirmed this directive it is clear that this is not an election gimmick by real cash flow for the residents of this country. It is highly unlikely that after such clear public pronouncements this directive could be reversed.
Rather than resisting Minister Chombo’s directive local authorities should take advantage of the directive by cleaning up their balance sheets to reflect their true financial position. It doesn’t make much financial sense to have a bloated debtors’ book which one is certain is a bad book and the residents have no capacity to repay.
A local authority cannot resort to mass property attachments to recover rates, i.e. it doesn’t make sense for council to repossess homes and stands when it is their duty to provide homes and stands.
Councils, local authorities simply need to clean up their balance sheets and statements and start afresh and residents warned that they have been given a reprieve but now they should play their part by paying their rates and taxes on time to ensure the city can deliver services and repair infrastructure.
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