More and more municipalities move to tax game farms as businesses

This will be devastating, says industry body.
A worker prepares to feed sable antelope at a game farm in Wolmaransstad. Image: Siphiwe Sibeko/Reuters

There seems to be an increased move by municipalities to change their property rates policies to allow them to bill game farms on a commercial rather than agricultural scale.

In Mangaung, the latest to propose such a change, it means owners of game farms will pay 15 times more from July 1, should the proposal be adopted.

Read: Sale of animal-linked NFTs raises conservation funds for South African reserve

That will be devastating, says Richard York, CEO of Wildlife Ranching SA.

Opportunity to engage

Municipalities are currently busy with public participation processes about their annual budgets, which includes the rates policy for the coming financial year.

If proposals such as this are not challenged now, it will be difficult for ratepayers to do anything about them at a later stage, says Ben Espach, director of valuations at Rates Watch.

While the emphasis during the budget process is mostly on the level of tariff increases, seemingly small changes to the property rates policy can have dire consequences for property owners, says Espach.

He has studied the proposed property rates policies of several municipalities and is submitting comment on behalf of the South African Property Owners Association (Sapoa).

Espach points out that game farms are already classified as businesses for the purpose of property rates in Buffalo City.

Dispute declared in Thabazimbi

Farmers in the Thabazimbi Local Municipality have been fighting against the same thing for the past few years, says Jacques Blaauw, who chairs a forum of community organisations that are negotiating with the council about the matter.

In this instance the municipality slipped the change in a few years ago after the public consultation was concluded – meaning the affected owners had no opportunity to object to it.

Blaauw says property classified as agricultural is taxed at a quarter of the residential rate, while commercial property is rated at double that of residential property.

The affected owners have declared a dispute with the municipality which has not yet been finalised.

In one example, says Blaauw, a 1 000 hectare farm that paid R7 500 last year according to the agricultural classification, which also qualifies for certain rebates, would have been liable for R93 000 if classified as a business.

What the law says

Blaauw says municipalities rely on the fact that the Local Government Municipal Property Rates Act excludes ecotourism and game farming from the definition of agricultural land – but forget that the law also requires rationality when determining the tariff, and that the tariff has to take affordability into account.

Drought conditions as well as the impact of Covid-19 have had a severe impact on the income of game farms, and owners will simply be unable to deal with such sharp increases.

He says municipalities can assist special categories of property like game farms through rebates, discounted tariffs, or exemptions.

The Thabazimbi council has agreed to a rebate of 30% – but even with that, being taxed as businesses is unaffordable for game farms, he says.

Service delivery, market pressure double whammy

Rudie van Zyl, owner of the game farm Klipfontein near Northam, says he is paying the Thabazimbi municipality R433 per month in accordance with the agricultural tariffs – but gets absolutely nothing in return.

He says farmers in the area even had to jump in to maintain the landfill site in town.

Read:

Van Zyl adds that an American hunter would be prepared to pay R30 000 for a kudu bull with 60-inch horns. Due to the impact of Covid-19 overseas hunters are however few and far between.

The alternative is to sell the animal to a local butcher for the meat, but that only fetches about R3 000.

He says it is simply not possible to pay multiples more for property rates.

Ramifications

Blaauw says that with the dispute in Thabazimbi dragging on for years, game farmers who are still paying for their property as if categorised as agricultural land are falling so far behind with their property rates that they will have to sell their farms to pay the bills unless there is some relief.

Mike Schüssler, economist at economists.co.za, says municipalities are increasingly trying to extract more money from honest citizens, because they have no control over their expenses.

They fail to collect consumer debt and try to get more out of those who are still paying.

This, says Schüssler, is killing the economy.

Listen to Suren Naidoo’s interview with Sapoa CEO Neil Gopal in this episode of The Property Pod (or read the highlights here):

COMMENTS   11

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Yet these same Municipalities plunder and steal from ratepayers giving no value back? Just doesn’t make sense. Beware the over plucking of low hanging fruit…the very people and organizations ( reluctantly) funding this disastrous ANC Government…. at this rate, soon there will be nothing left to plunder as the contributors move to greener pastures!

Most are not agricultural farms any more, but hospitality businesses, like game farms and farm B&B’s or lodges – getting away with no tax.

But why would giving the very people who squandered taxpayers’ money the power to extract more , make any difference?

If they can avoid paying taxes let us help them, for as long as possible.
Funding a criminal organisation will just extend the prolonged suffering of SA.

The law enables the municipal manager to transfer the cost of his inefficiencies to the captured property owners within the municipal boundaries. The municipal councilors have the power to use rates and taxes as a tool to expropriate the capital of property owners for the benefit of salaried positions in the municipality.

The capital structure, or asset value of properties, is siphoned off to finance consumption. This process has reached the tipping point when property values come under pressure as they did for the listed property sector, or when manufacturing businesses flee from ANC municipalities as they do all over the country. Expropriation without compensation is alive and well in the form of a slow, relentless, and escalating process.

ANC municipalities consume the assets of property owners to convert property values to sewage, which fills the potholes in that community. A municipal structure is an unsustainable exercise under a socialist government. When a socialist government uses redistribution to address inequality, they start a process of decay that turns infrastructure into sewage. We have reached the point where ANC municipalities already have a shortfall of infrastructure and an oversupply of sewage. Socialists are ignorant to the fact that the process of redistribution is finite. There is nothing left to redistribute, only unemployment, poverty, sewage, and potholes.

This striking manifestation of redistribution proves how socialism delivers the opposite of what it promises.

the strangest thing about this post is the single down vote. I suspect if MW looks at the single down votes it will be a single IP address trolling.

Boepens, it is not a downvote. It is an upvote from an ANC voter. He just pushed the wrong buttons as they constantly do at Eskom. Everything works upside down in their world.

Another symptom of an imploding unsustainable system. A system that exterminates tax payers and has to cast the net ever wider, creating new ways to tax those few left standing, to try and offset their diminishing returns.

Our current generation of leaders are a special bunch, nearly 3 decades in power, with so many wasted opportunities. We can only imagine how incredible this country could have been – if the culture of instant gratification and entitlement had been tempered just a little.

Ironically had some restraint been exercised, there would have been a much larger pot available for redistribution and you would not have alienated the new incoming younger generation so much.

Employment opportunities are the only viable and sustainable form of redistribution. Property rights are the underlying foundation of economic activity and wealth creation. Employment opportunities redistribute the advantages of property rights among job seekers, without canibalizing the value of that property. This is the miracle of the market economy.

The unsustainable socialist redistribution of property is the value-destructive alternative to this mutually beneficial system of property rights and employment opportunities.

The fact that South Africa is cursed with the highest unemployment rate on earth, proves that our value-destructive political system is the worst manmade disaster on earth.

This value-destructive political system is what will ensure the pensions are raided next and thereafter the SARB. Sadly both will be encouraged and endorsed by the electorate.

It will only get worse. These farm owners are low hanging fruit. We owned a home on a game farm west of Warmbaths for many years. Zero municipal services as in none/ niks but we had to pay R2500 monthly rates to the municipality. For nothing.

They did it because they could. And that is how the ANC works .. they do it because they can.

End of comments.

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