City of Joburg backtracks on reprieve for punishing power tax

A punishing power tax knee-capping Johannesburg’s poorest residents will not be scrapped, finance MMC Dada Morero has told Daily Maverick.

Instead, a review process for the R230-a-month local tax on prepaid electricity customers will only be tabled at the end of July and could take months to finalise.

“The review does not mean scrapping but to allow us to look at options which will be favourable to customers,” Morero said. Asked what the options were, he said he did not know but that discussions would start in the mayoral committee at the end of July.

Last week, Morero said “we are willing to enter a process to look at this availability charge and its impact on residents, and undergo a process to review this amount”, as Nonkululeko Njilo reported here.

But council insiders said scrapping the power tax is not an option because the City’s strained budget would take a knock.

Johannesburg is substantially funded by electricity sales, and the City is in the red. The Organisation Undoing Tax Abuse says its debt levels are at R49.65-billion, with electricity debt alone at R7.65-billion.

The City has a budget of more than R70-billion, so the impact of debt is clear. Morero is seeking loans, but with coalition troubles, the EFF is refusing to pass these, making the power tax more and more important.

On Tuesday, 16 July, the City planned to host a media and public briefing on the power tax and tariffs – which have been met with a wall of outrage from struggling citizens – but cancelled it 30 minutes before it started as those responsible went into an emergency huddle.

“The City manager, Mr Floyd Brink, has been called to an urgent engagement with key stakeholders in the energy sector together with the City leadership,” said the media team.



The City informed residents about the details of the power hikes on 28 June ahead of implementation on 1 July. This included the R230 surcharge, which shocked especially poor prepaid users who say they were not told. Rates, taxes and utility tariff increase proposals are included in the annual integrated development plan, which is taken around the City’s eight regions, but these are poorly attended meetings.

The DA’s Johannesburg leader, Belinda Echeozonjoku, says a petition to scrap the power tax has just more than 20,000 signatures, signalling that people did not expect it. She says it should have been phased in and set at a lower amount. Ekurhuleni does levy a service charge on prepaid users, but this is R80 a month.

Residents interviewed by Daily Maverick say they are getting far fewer units than they did in June and that neither City officials nor councillors had told them of the increases or the tax.

The city says indigent households (earning under R6,000 a month) receive a free extended social package, which includes a small amount of free electricity, but only 30,000 of a potential 920,000 poor households are on it, as Chris Yelland has reported here. DM