Stats SA recently published the Financial census of municipalities report, to provide an idea of how financially dependent municipalities are on government funding, “but there is more to this than meets the eye”.
How municipalities generate income
As per the report, municipalities “generate or receive income from a variety of sources”, which can be grouped into two categories: they can generate their own income, or receive funding from other avenues.
Own funding could be generated through property taxes, services and traffic fines, while funding from external avenues includes government grants and subsidies or public donations.
Stats SA explains: “Government grants and subsidies include two forms of intergovernmental fund transfers, namely general-purpose (i.e. unconditional) and specific purpose (i.e. conditional) grants”.
Out of SA’s 257 municipalities, 71% of all income received during 2020 was self-generated, while the remaining 29% was made up from government grants, subsidies and donations.
But here’s where it gets interesting. While South Africa’s municipalities are becoming more self-sufficient and more streamlined to generate their own income, a large portion of this still comes from traffic fines.
In fact, traffic fines currently make up the biggest portion of municipalities’ income – a whopping R5.9 billion was collected in fines and fine-related revenue during 2020.
In 2019, municipalities generated R4,338,137 from traffic fines. That figure increased to R4,600,810 billion last year.
In addition, municipalities also generated roughly R185 million in 2020, primarily from issuing traffic-related licences and permits – R207,395 in 2019 and R185,669 in 2020. The report can be read here.
Breakdown per province
Provincial data reveals that Gauteng generates the most traffic fine income at R2.49 billion, followed by the Western Cape with R2.1 billion, and KwaZulu-Natal with R363.2 million.
Mpumalanga generates R333.9 million, Eastern Cape R317.1 million, Limpopo R117.8 million, North West R97.5 million and Northern Cape R96.7 million and Free State R49.4 million.
Back in 2019, the City of Joburg’s medium-term budget showed that it expected to collect R563 million in fines, penalties, and forfeits at the time.
READ MORE HERE: The lucrative business of traffic fines