Not all municipalities are created equal – and nowhere is this more evident than in the vast gulf between those that can raise their own revenue and those that cannot.
 

Authors:

T Chonco-Spambo
 

Summary: 

The general statement that local government has extensive revenue-raising powers often hides the huge disparities in revenue generation among municipalities in South Africa and creates the perception that all municipalities are self-sufficient. This article looks at fees as an alternative source of revenue for local government in South Africa. It explores three primary ways of financing municipalities. It then discusses the financing of municipal services, with a focus on the importance of fees. Comparators of rural municipalities versus urban municipalities are used throughout the article to show how varied these two types of municipalities perform when (a) raising their own revenue; (b) being allocated their share of nationally raised revenue (the local government equitable share); and (c) receiving financing for territorial actions. The comparators show that poor, rural municipalities get the shorter end of the stick across the fiscal framework. A descriptive research approach was used for this article, coupled with an evaluative conclusion. The evaluative conclusion argues in support of a bigger focus on assisting municipalities to leverage their revenue-raising powers, specifically that of collecting fees, as opposed to dependence on the equitable share as an equalisation mechanism. 


Link to book chapter