News in South Africa 15th August:

1. JHB School fees could soar:

The City of Johannesburg’s sudden decision to reclassify school properties, thereby raising payable rates eight-fold, will have a devastating impact on pupils in the metro, according to organisations challenging the change.

JHB School fees could soar
Image taken by: CDC

Every year, the Gauteng Department of Education is faced with a scramble to place pupils in schools, with many missing out on valuable first-term time because of backlogs. As the 2022 school year got underway, more than 1,400 Grade 1 and 8 pupils were yet to be allocated a spot.

Schools in the province, and particularly those in Johannesburg, are set to become even more overwhelmed if recent changes to educational institutions’ property classifications are upheld. Schools that can absorb these massive rate hikes will almost certainly raise their fees to compensate, while many won’t be able to keep their doors open, explained Anne Baker of the National Alliance of Independent Schools Associations (NAISA).

“Further to that [rising school fees], the concern is that some schools will have to close. Parents will not be able to sustain an increase that would be required,” Baker stated.

“The big thing that worries us is the effect on the children, especially in the low-fee and medium-fee schools. The Gauteng [education] system is under pressure all the time, and we know that the State has to take in any child, so if a school closes, the State is obliged [to place those children] but whether there will be space is another issue.”

Independent schools cited by Baker were caught completely off-guard when receiving their rates bills in July, noticing massive increases with no prior consultation.

The reason for these massive rate hikes lies in the City of Johannesburg’s decision to reclassify schools as businesses.

Previously, schools had been categorised as educational properties. Most schools under the NAISA umbrella are classified as Public Benefit Organisations – not regarded as businesses – and have benefitted from rates exemptions. The decision to scrap “education” as a property classification and impose new rates for “public service properties” will also extend to public schools and tertiary education institutions.

Despite the outcry, the City of Johannesburg is defending its decision to reclassify educational properties in court. The legal battle to have the City of Johannesburg’s rate hikes put aside is being led by AfriForum and JSE-listed education group ADvTech.

“AfriForum hopes that the case which will be heard in October will bring permanent clarity on the matter and relief from the new excessive tariffs,” said Alana Bailey, AfriForum’s head of cultural affairs.

2. Electricity price spike:

Eskom has warned of massive electricity price increases for consumers if energy regulator Nersa moves ahead with its proposed methodology changes.

The proposal is for households to pay a tariff reflective of how much it costs to produce that electricity from the power stations it is drawn from.

However, Eskom warned that there are currently cross-subsidies in place where heavy power users subsidise the costs for lower users.

Removing these would result in a massive increase, as tariffs do not reflect the cost of production.

3. Discovery medical aid increase:

Discovery Health has announced its finalised contribution increases for the Discovery Health Medical Scheme (DHMS) for 2022. These will only be in effect from October to December. The changes were to take effect from May, but Discovery said it would defer them to October.

The country’s largest medical aid provider originally told members in October last year that contributions for 2022 would increase by 7.9%, but that this would only be effective from 1 May. It said this “was to maintain short-term affordability for all our members”.

DHMS says its contribution increase, effective 1 October 2022, will remain at May’s planned level, “to make sure that contributions remain on par with future medical inflation while giving [members] financial relief through a delayed contribution increase”.

It sent communication to members last week informing them that details on contribution changes would be made available soon.

Because the increase is only in place for three months – a quarter of the year – the annualised increase across the whole of 2022 is effectively around 1.98%.

The actual effective ‘annual’ increase for members was 2.9% last year because Discovery deferred increases to mid-year.

Other medical aid companies may follow suit and apply their increases from October as well, or sooner.

4. Possible petrol price cut:

Mid-month data from the Central Energy Fund shows that motorists could see a significant petrol and diesel price cut in September.

The data, which serves as a snapshot of market conditions as of 12 August 2022, shows that the petrol price could drop by as much as R2.60 litre next month, while diesel is showing an over-recovery of R2.30 per litre.

The mid-month snapshot is as follows:

  • Petrol 95: over-recovery/decrease of 260 cents per litre;
  • Petrol 93: over-recovery/decrease of 244 cents per litre;
  • Diesel 0.05%: over-recovery/decrease of 230 cents per litre;
  • Diesel 0.005%: over-recovery/decrease of 225 cents per litre;
  • Illuminating Paraffin: over-recovery/decrease of 193 cents per litre.

The Department of Energy has stressed that the daily snapshots are not predictive and do not cover other potential changes like slate levy adjustments or retail margin changes, which are determined by the department at the end of the month, taking all variables into account.

The DoE makes adjustments based on a review of the entire period. Furthermore, the outlook can change significantly before month-end.

5. SARS clamping down on wealthy:

The South African Revenue Service and other investigating authorities are calling for new legislation to assist them in clamping down on ‘unexplained wealth’ in the country.

SARS recently beefed up its investigative capacity to go after wealthy taxpayers in South Africa. Part of the push is to determine the sources of their wealth and ensure they are paying their dues.

Experts from the Organisation for Economic Co-operation and Development (OECD) who participated in a workshop with the heads of several agencies last month have encouraged them to pilot and test the proposals on unexplained wealth.

Unexplained wealth is the possession of assets with a value far above a person’s declared income.

All information sourced from articles posted by: Business Insider, News24, Moneyweb, BusinessTech, and BusinessLive.

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