Landowners win illegal tax implementation case in greater Lydenburg area

Farmers in the Lydenburg area recently scored a major hit against Thaba Chweu Local Municipality (TCLM) when they won a case against excessive property taxes that the council had implemented.

According to Eric Johnson, the chairperson of the Thaba Chweu Rural Forum (TCRF), their 170 members are elated that the Supreme Court of Appeal (SCA) after a legal fight of more than 14 years, found that the municipality’s implementation of taxes on agricultural land, was illegal.

This case, which was earlier served before the Mpumalanga High Court (MHC) and in the farmers objected to unfair implementation of property tax for agricultural land by TCLM, started in 2009.

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The MHC found that the implementation of the taxes by the council was indeed unlawful.
However, the invalid conduct was not set aside due to the court’s view of the delay by the appellants (TCRF) to institute proceeding against the municipality.

In its judgment, the SCA said the municipality had failed to clearly implement the letter of the law and flouted the principle of legality and sought to profit from amounts unlawfully levied.

“Regulations of the Rates Act says that the effective rate applicable to farms could not exceed 25% of the rate applicable to residential properties.

“However, the applicants (municipality) in each financial year in question, levied excessive rates pertaining to inflated property valuations in excess of the prescribed 25%.”

The SCA upheld the appeal of the TCRF and ordered that the municipality be prohibited from recovering from the appellants amounts greater than the legally permissible limit.

The order of the MHC was also set aside and substituted with one declaring the rates notices published in the Mpumalanga Provincial Gazette for the 2009 to 2018 financial years, in terms of the Local Government: Municipal Property Rates Act 6 of 2004 (Rates Act), as unlawful and invalid to the extent that it relates to arable or pastoral farming.

The SCA also ordered the municipality to credit the accounts of TCRF members from whom amounts in excess were recovered.

“What is very worrying is that for 14 years TCLM fought a clearly unwinnable case using taxpayers’ money. The fact that cost orders were made against the municipality in each and every case before the court, shows the fruitless expenses,” Johnson said.

Although he could not speculate on what the cost of the legal battle was, he did indicate that it could run into millions of rands.