Municipalities want Sars to deduct your debt from your tax refund

SALGA president Thembi Nkadimeng. Picture: Neil McCartney

Tax payers could see their utility bills being paid with their tax refunds before what is left is deposited in their bank accounts.

This is one of the measures tabled in the National Council of Provinces (NCOP) by Thembi Nkadimeng, President of the South African Local Government Association (Salga) as part of Local Government Week.

She said it is a well-known fact that an average of 59% of municipal debts are not recoverable.

“In 55 municipalities more than 80% of debts cannot be recovered and debt collection at 99 municipalities took more than 90 days.”

As a result, Salga wants the NCOP to consider measures to write off the ever-increasing household debts to municipalities. This would include the introduction of a national Bill for writing off these debts in exchange for the installation of prepaid water and electricity meters.

Salga also wants the NCOP to consider measures to improve municipal revenue collection instruments such as:

  • Amending the Tax Administration Act to enable SARS to first check if your municipal debt is paid. The amount due to the municipality would then be paid first before your refund is deposited into your bank account.
  • Amending schedule 2, section 10 of the Municipal System Act that determines that municipal councillors and employees may not be in arrears with their municipal bills for a period more than three months. This requirement should be extended to include all state employees as well as elected and appointed representatives.
  • Improving collection efficiency by establishing a district revenue collection agency that will free up municipal employees to focus on more pressing service delivery efforts. SARS systems and processes could be considered to do this once due diligence is completed.
  • Amending the procurement regulations to make it compulsory for any potential service provider to produce a municipal services rates compliance certificate before receiving a government contract.

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