Western Cape Premier Ebrahim Rasool has again raised the prospect of a provincial development levy to boost funds for subsidised housing.
Speaking at the opening of the provincial legislature on Friday, Rasool said it has become clear that the current subsidy budget is inadequate for growing housing demand.
Private-sector loans will be ”an irresponsible alternative” to the shortfall, he said.
The province has to consider, in full consultation with its social partners and, most importantly, the private sector, other bold initiatives.
”Can we use the state’s collective portfolio of property as leverage to bring gap housing to the market and to use such profit generated to augment the subsidy budget?” he asked.
”Is this also not the time to start consulting broadly to allow the poorest amongst us to benefit from the Western Cape property boom through a development levy — something that is standard practice in many other successful countries?”
Rasool first raised the prospect of the development levy, so called because it is a tax on new property developments, at the Western Cape land summit in July last year.
Development levies are used overseas for a variety of purposes, from covering the cost of road and water infrastructure to supplementing the general budget of local authorities.
The Democratic Alliance spokesperson on development planning in the province, Alan Winde, said in reaction that the proposal is populist, but misleading, given the province’s poor performance on housing delivery.
He said the Western Cape is not doing well in spending the money that it has been allocated, so it is not clear how levying housing developers will ensure that more low-cost houses are built.
In the previous financial year, the allocation to the province from the national government for housing had been R712-million, but R112-million — enough to build 3 200 houses — was not spent.
For the current financial year, the province received R810-million, of which only R492-million had been used by the third quarter.
”A levy would not only risk putting the brakes on the Western Cape’s construction boom, but would be difficult and expensive to administer and subject to fraud,” he said. — Sapa