In City of Tshwane Metropolitan Municipality v Mathabathe and Another [2013] 3 All SA 227 (SCA), the Supreme Court of Appeal dealt with the power of a municipality to levy rates.

A landlord leased property to a tenant within the jurisdiction of the City of Tshwane. Despite the City’s having zoned the property for residential purposes, the tenant used it for business purposes.

Consequently, the City categorised the property as ‘non-permitted use’ and charged the tenant a higher rate. This was done in accordance with the City’s rates policy.

The SCA found that the list of categories of rateable property in the Municipal Property Rates Act, 2004 was not exhaustive. The City could lawfully add categories to the list, including ‘non-permitted use’.

Furthermore, the SCA held that there was nothing wrong in the imposition of a higher rate for a property that had been categorised as ‘non-permitted use’. The City’s power to impose taxes is an original power and a legislative act. It does not amount to administrative action.