Govt wants SARS to withhold tax refund until utility bills are paid

According to an article recently published by BusinessTech, the South African Local Government Association (SALGA) is considering a number of new measures to improve municipal revenue collection across the country.

Auditing outcomes under the current local government administration, now in its third year, have regressed.

Over the three-year period, the audit outcomes of 76 municipalities regressed, while only 31 improved. Only 11% of the 257 municipalities getting clean audits.

The suggested measures include:

  • Working with the South African Revenue Services (SARS) to withhold tax refunds for non-payment of utility bills. The municipality will be paid first before a refund is deposited to the tax payer’s account
  • Write-offs of the ever-increasing household debts to municipalities, including the introduction of a national bill for the writing off of these household debts in exchange for the installation of prepaid water and electricity metres
  • Amending schedule 2 section 10 of the Municipal System Act so all state employees are required to be up-to-date on municipal bills, and not just municipal councillors and employees
  • The establishment of a District Revenue Collection Agency to achieve better collection efficiencies and free up municipal personnel to focus on more pressing service deliver efforts
  • Amending the procurement regulations to make it compulsory for any potential service provider to produce a municipal services rates compliance certificate, prior to being awarded a government contract.
  • Resolving municipal and customer debts to Eskom
  • Bringing together preventative controls to improve the financial state of municipalities

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