Bigger middle class needed

SUSTAINING SERVICES: CAPE TOWN'S PLAN AS TARIFF REFORMS FACE LEGAL CHALLENGE

- Liesl Peyper Moneyweb

Cape Town's ability to sustain infrastructure and public services in the decades ahead will depend heavily on its capacity to grow the middle class and expand its base of ratepayers.

In its long-term development plan draft, which outlines the city's vision over the next 25 years, the city notes that the poor performance of SA's economy in recent years, compounded by inefficiencies in the state, has resulted in a significantly constrained fiscal environment.

The increasingly constrained national fiscal envelope has also meant that the grants the city receives from national government for important service delivery outcomes are diminishing.

In addition, persistently high rates of local poverty mean the city's cross-subsidisation model is under pressure.

Legal challenge The city's emphasis on expanding its base of paying customers to sustain public services comes as its tariff reforms face legal challenge.

The South African Property Owners Association (Sapoa) confirmed that it is taking the City of Cape Town to court over the new municipal tariff structure.

The organisation argues that the fixed charges introduced by the city amount to property rates that have been imposed unlawfully, as they do not comply with the provisions of the Property Rates Act.