A Free State farmer on Thursday won, in the Bloemfontein High Court, what is regarded as a test case on the levying of tax on agricultural land.
Farmer Hendrik Boshoff from Reitz in the eastern Free State was granted a court order declaring illegal the levying of a 2% municipal tax on his farms.
Free State Agriculture agreed to fund the application, which Boshoff won with costs.
Judge president J P Malherbe agreed on Thursday with Malherbe that the Nketoana municipality failed to adhere to a range of legal requirements before levying the tax.
These relate primarily to the proper valuation of agricultural properties.
The required valuation court had, for instance, not been properly constituted.
As a consequence, the municipality failed to compile a final and binding valuation list as a basis on which the tax could be calculated, Malherbe said in his judgement.
Malherbe did not find that a municipality does not have the powers to levy a tax on agricultural land at all.
He emphasised that Boshoff attacked the way in which the municipality levied the tax, and not whether it had the necessary authority to do so.
The Constitution, the Local Government Act, as well as a 1962 provincial ordinance grant a municipality the power to levy a property tax, Malherbe said.
Chief executive Pieter Moller from Free State Agriculture also confirmed that Thursday’s judgement does not imply that municipalities cannot levy a land tax at all.
It merely prevents these authorities from levying such a tax in an unjust or unprocedural way, he said.
The government is currently in the process of drawing up a new act to regulate the power of a municipality to impose rates on a property. However, it has up till now been a drawn-out procedure. The 19th and latest concept Bill for this was published on March 18.
Farmers argue that they should not have to pay any rates on land they use for production purposes because it would impact negatively on their essential economic contribution, Moller said.
Nketoana will now have to foot the total bill of Boshoff’s application with taxpayers’ money.
Moller said it is a pity that the particular local and provincial governments failed to resolve the issue despite Free State Agriculture’s repeated attempts to mediate on it.
”Because they refused to give in, we had to turn to the courts. It is tragic that taxpayers would now have to pay for something which could have been resolved through negotiation.”
Moller added that the relationship of trust between Nketoana municipality and its farmers has been seriously damaged by the dispute.
This is of concern because the two parties are supposed to cooperate to ensure a better future for the agriculture-dependent community, he said. — Sapa