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Constitution of the Republic of South Africa, 1996 (Act No. 108 of 1996)

Chapter 13 : Finance

Provincial and Local Financial Matters

229. Municipal fiscal powers and functions


(1) Subject to subsections (2), (3) and (4), a municipality may impose—
(a) rates on property and surcharges on fees for services provided by or on behalf of the municipality; and
(b) if authorised by national legislation, other taxes, levies and duties appropriate to local government or to the category of local government into which that municipality falls, but no municipality may impose income tax, value-added tax, general sales tax or customs duty.


(2) The power of a municipality to impose rates on property, surcharges on fees for services provided by or on behalf of the municipality, or other taxes, levies or duties—
(a) may not be exercised in a way that materially and unreasonably prejudices national economic policies, economic activities across municipal boundaries, or the national mobility of goods, services, capital or labour; and
(b) may be regulated by national legislation.


(3) When two municipalities have the same fiscal powers and functions with regard to the same area, an appropriate division of those powers and functions must be made in terms of national legislation. The division may be made only after taking into account at least the following criteria—
(a) The need to comply with sound principles of taxation.
(b) The powers and functions performed by each municipality.
(c) The fiscal capacity of each municipality.
(d) The effectiveness and efficiency of raising taxes, levies and duties.
(e) Equity.


(5) Nothing in this section precludes the sharing of revenue raised in terms of this section between municipalities that have fiscal power and functions in the same area.


(6) National legislation envisaged in this section may be enacted only after organised local government and the Financial and Fiscal Commission have been consulted, and any recommendations of the Commission have been considered.