Transfers, taxes and tariffs: fiscal instruments and urban statecraft in Cape Town, South Africa

ABSTRACT

Municipal revenue is an important site of urban statecraft. Against the backdrop of the metropolitan consolidation of Cape Town’s urban governance in 2000, this paper traces two key revenue sources: national transfers to local government, with a focus on conditional grants; and the City’s own sources, including property tax and service charges. While the design of these instruments intends to be redistributive and support metropolitan autonomy, their deployment poses challenges and contradictions, particularly for the everyday operations of the urban state. Not only does the analysis demonstrate the underexplored role of revenue instruments and logics in urban statecraft, but also the importance of ‘placing’ debates about urban fiscal geographies in southern cities.

摘要

转移，税收和关税：南非开普敦财政工具和城市治国方略。 Area Development and Policy. 市政收入是城市治国方略的重要因素。根据2000年开普敦城市治理大都市整合的背景，本文对于开普敦两个主要的收入来源进行了分析：一个是由国家向地方政府转移支付，重点是有条件的赠款转另一个是该城市自己的资源，包括物业税和服务费。尽管这些收入工具的设计意图是重新分配，并且支持大都市自治，但在实践中仍然存在挑战和矛盾，特别是对于城市国家的日常运营而言。这一分析不仅证明了收益工具和逻辑在城市治国方略中的作用还没有得到充分发掘，而且还证明了’安置’关于南部城市的城市财政地理的重要性。

RESUMEN

Transferencias, impuestos y aranceles: instrumentos fiscales y estadismo urbano en Ciudad del Cabo (Sudáfrica). Area Development and Policy. Los ingresos municipales representan un factor importante del estadismo urbano. En el contexto de la consolidación metropolitana de la gobernanza urbana en Ciudad del Cabo de 2000, en este artículo exploramos dos fuentes principales de ingresos: las transferencias nacionales al gobierno local, con especial hincapié en subvenciones condicionales, y las propias fuentes de la ciudad, incluyendo impuestos sobre bienes inmuebles y costes de servicios. Aunque se pretende que el diseño de estos instrumentos sea redistributivo y apoye la autonomía metropolitana, ponerlo en práctica crea dificultades y contradicciones, sobre todo para las operaciones cotidianas en áreas urbanas. En el análisis no solo demostramos el papel insuficientemente explorado de los instrumentos y la lógica de financiación para el estadismo urbano, sino también la importancia de incluir debates sobre las geografías fiscales urbanas en las ciudades del sur.

Аннотация

Трансферты, налоги и тарифы: фискальные инструменты и городское управление в Кейптауне, Южная Африка. Area Development and Policy. Муниципальные доходы – важный объект городского управления. На фоне консолидации городского управления Кейптауна в 2000-х годах в этой статье прослеживаются два ключевых источника доходов: национальные трансферты местным органам власти с акцентом на условные гранты; и собственные доходы города, включая налог на имущество и плату за услуги. Хотя эти инструменты предполагают перераспределение и поддержку городской автономии, их использование создает проблемы и противоречия, особенно для повседневной деятельности городских властей. Анализ показывает не только недооцененную роль инструментов и логики доходов в управлении городом, но и важность дебатов о фискальной географии южных городов.

KEYWORDS:

• fiscal geographies
• public finance
• revenue
• South Africa
• statecraft
• urban development
• JEL

关键词:

• 财政地理
• 公共财政
• 税收
• 南非
• 治国方略
• 城市建设

PALABRAS CLAVE:

• geografías fiscales
• finanzas públicas
• ingresos
• Sudáfrica
• estadismo
• desarrollo urbano

Ключевые слова:

• фискальная география
• общественные финансы
• доходы
• Южная Африка
• городское управление
• городское развитие

ACKNOWLEDGEMENTS

The authors are deeply indebted to the journal editors and four reviewers who took part in the peer-review process. The paper is infinitely better due to their suggestions and support. All mistakes or controversial points remain those of the authors alone.

DISCLOSURE STATEMENT

No potential conflict of interest was reported by the authors.

Notes

1. The research process concluded before the availability of the bulk of the 2018/19 audited expenditure data. For this reason, much of the data for the years inclusive of 2018/19 and onwards are from either adopted planned budgets or projected figures reported in the same documentation. Where further information was available at the time of writing, some additional comments are noted in the text.

2. Some data were obtained through the South African National Treasury’s Municipal Money platform (for the underlying data, see https://municipaldata.treasury.gov.za/) and Municipal Budgeting Facility (http://www.treasury.gov.za/documents/mtbps/default.aspx). The City of Cape Town’s Open Data were also used (https://web1.capetown.gov.za/web1/opendataportal/DatasetDetail?DatasetName = Budgets).

3. All data are reported in nominal, rather than real, terms; however, the authors’ own calculations indicate that the key trends reported are not sensitive to the use of real or nominal figures.

4. This was a common civil society slogan during anti-apartheid campaigning in the early 1990s, pushing for the consolidation of the metro in order to support the redistribution of revenues across the City. It reflected the demand for consolidated metropolitan regions. Notably, despite the formation of a single metropolitan authority, the question of spatial allocation of fiscal resources across the metro has always been contested.

5. The bulk of the figures provided in the discussion of the City of Cape Town’s budgets is for the financial year 2018/19 and preceding years. To make the budget items and the nature of the revenue/funding sources more readable, some budget line item terminology has been changed and related items have been disaggregated or aggregated.

6. The planned R4 billions of borrowing specified in the 2018/19 City of Cape Town adopted budget was an exceptional sum, motivated in part by the severe drought-related water crisis the City was experiencing at the time. Whilst the share of borrowing had been growing and is projected to grow in the City of Cape Town’s 2020/21 adopted budget, rising to R5 million in 2021/22, the City of Cape Town’s 2019/20 adopted budget reported that the 2018/19 projected spend was only going to be a fraction of the originally budgeted R4 billion.

7. The South African Cities Network (2011) discusses the loss of the RSC Levies as an own-revenue source for cities in 2006/07 and the fact that it was only partially replaced by increased grants – initially in terms of increases in the Equitable Share unconditional grant, but later in terms of conditional grants.

8. Figure 1 reports the combination of the main sources for operating revenue and funds obtained (from both internal and external sources) for capital spending. In South African local government reporting, these two categories are often kept separate for accounting purposes. However, in this instance they have been combined to give an aggregated sense of funds available to the City of Cape Town over an extended period of time. In Figure 1 it is important to note that budgeting and spending on capital can be somewhat ‘lumpy’ as capital projects often vary substantially in terms of scale and cost.

9. Interviews with transport experts within the City of Cape Town and the University of Cape Town confirm that the decision to invest in the BRT system was due to the structure of national funding grants. The subsequent decision to invest in a TOD strategy resulted from concern that the BRT could not function optimally because of the spatial sprawl in the City.

10. Interviews with officials indicated that they are extremely concerned about ensuring that property values remain high in key rate-paying areas. They also indicated that the approval of new high-income residential projects is often weighed up first and foremost for their contribution to the rates base. Interviews with NGOs further confirm that efforts to access land for affordable housing in well-located areas are resisted by city officials on the basis that the land’s highest and best use requires higher value investments that can be taxed more heavily by the City.

11. According to the official who served as chief financial officer in the City in the late 1990s, the choice to invest in strategies to maintain property values in the CBD and historically White areas at large was fundamentally driven by the City’s finance department.

12. In 2018, this issue was hotly debated and the then mayor, Patricia De Lille, and mayoral committee member Brett Herron argued for the release of well-located land for housing for the poor. These projects, however, never came to fruition. Herron attributed his own departure from the Democratic Alliance to the refusal of the City to address the issue of housing access for the poor.

Additional information

Funding

The research was completed with support from the PEAK Urban programme, funded by UKRI’s Global Challenge Research Fund [grant number ES/P011055/1]. Additional support came from the Mistra Urban Futures programme, which is mainly funded by Mistra (the Swedish Foundation for Strategic Environmental Research) and Sida (the Swedish International Development Cooperation Agency).