Real Estate Investor Magazine South Africa March/April 2020 | Page 38

LEGAL Development charges & levies Everything you need to know about the Amendment Bill SIDIMA MFEKU The Municipal Fiscal Powers and Functions Amendment Bill ensures that the cost of the municipal infrastructure required to service a new land development is primarily borne by its direct beneficiaries. It advocates for the support of economic development by local developers in different municipalities around the country. I n countries like South Africa, the sanctions we pay are often used to finance various governmental development services like roads, schools, hospitals and other infrastructural developments of the country. Sometimes even used to rescue some of government’s divisions out of economic scares. The taxing of the various business divisions in the country is to make certain that all sectors fairly contribute towards the innovation of South Africa as a nation. This is widely known to be carried out by the South African Revenue Services, SARS. With the new Municipal Fiscal Powers and Functions Amendment Bill one wouldn’t know what the difference is between taxes paid to SARS and the charges that the bill enables Municipalities to levy on property developers. What is the Amendment Bill? The Municipal Fiscal Powers and Functions Amendment bill establishes an unambiguous, fair and consistent basis for municipalities to recover development charges for all new land development projects that require statutory approvals 36 MARCH/APRIL 2020 SA Real Estate Investor Magazine through the municipal land use planning system. According to the National Treasury “the purpose of the bill is to increase the amount and the predictability of development charge revenue to provide both municipalities and developers with more certainty and assurance that the costs of infrastructure are covered by its users. The incidence of the payment is also immediately apparent as the land owner pays and, to the extent that the market permits, the land owner will pass on these costs to the purchaser of the property that is sold.” The Amendment Bill provides for a uniform regulation of development charges. Development charges are a once- off charge levied by a municipality on the land owner as a condition for approving land development application. They are imposed to cover the costs incurred by the municipality when installing new infrastructure or upgrading an existing infrastructure that is required to service the proposed development.