The City of Cape Town has confirmed it will not appeal the Western Cape High Court’s ruling on tariff structures, opening the way for a revised budget process to begin.
In a statement issued this morning, the City said it will now publish amendments to its tabled 2026/27 Budget for public comment in the wake of the judgment.
The City maintains that the ruling’s primary impact is to curtail the ability of municipalities, including Cape Town, to cross-subsidise services in a manner that shields lower- and middle-income households from the full cost of those services. The proposed budget amendments, it says, reflect the City’s commitment to preserving that protection within the boundaries set by the court.
The City was also at pains to emphasise that all revenue raised in 2025/26 has been directed toward its intended purpose for infrastructure investment and service delivery. Equally significant, the court’s ruling does not question the legitimacy of these funding requirements; the City must still be resourced to function. What changes under the proposed 2026/27 framework is not the obligation to fund those costs, but the manner in which ratepayers will contribute to meeting them.
Protection for lower- and middle- income
Mayor Georidn-Hill Lewis says a key impact of this court ruling is what the City has warned all along: that water and sanitation fixed charges will go up for many families in lower- and middle-value residential properties, and go down for higher-value properties.
“We have done our utmost to mitigate this effect. To protect lower- and middle- income households from the impact of this court ruling, we propose a further raising of the rates-free rebate to the first R620 000 of property value, up from R450 000, for residential properties under R8m. All indigent benefits will also apply up to R620 000 residential property value.”
This, according to the mayor, will reduce property rates for many households in the lower- and middle- value bands to mitigate the rise in fixed water and sanitation charges they will face because of the court ruling.
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“While we adjust for the impact of this ruling, we remain concerned about its implications for the ability of municipalities to equitably cross-subsidise in utility tariffs in the South African social context. We will engage the National Treasury and Co-operative Governance departments nationally to seek regulatory clarity on available options for municipalities to equitably cross-subsidise lower- and middle-income households,” he says.
We do not propose any cuts to Cape Town’s essential infrastructure projects, like pipe replacements, better sanitation and public transport.
“It remains my firm belief that Cape Town cannot truly work unless it works for everyone. For this reason, we do not propose any cuts to Cape Town’s essential infrastructure projects, like pipe replacements, better sanitation and public transport. To cut these projects, as has been suggested by some, would lead to a less functional city and less basic dignity for residents. It would be a terrible and indefensible action. These are precisely the investments that make Cape Town the most functional city in the country.”
Proposed amendments will be published for comment in a supplementary public participation process from 27 May to 10 June 2026 include the following. City-wide cleaning costs are to move back into property rates. This will remove the city-wide cleaning charge as a standalone item on bills, and increase property rates for residential customers – changing the -10,2% reduction tabled in March. Commercial property rates will also increase while electricity unit costs will reduce due to the phased reduction of the surcharge contribution to city-wide cleaning. Residential electricity tariffs remain unchanged as these customers no longer contribute to city-wide cleaning in this way.
‘Pipe-levies’ back
Fixed water and sanitation charges are to revert back to water meter connection size, the method used before property value bands. According to the City, this impact of the court ruling means that higher value properties will pay less fixed charges while lower value properties will pay more than they do currently. The City says it has tried to buffer this impact by consolidating the fixed tariff charged for all meter sizes up to 22mm, and shifting costs to higher consumption users compared to the March tabled budget.
Lastly, to protect especially lower- and middle- income households from the changes to fixed charges, the City will further raise the indigent relief qualifying threshold and rates-free benefit. All residential properties up to R8m will now receive the first R620 000 rates-free, up from R450 000 in 2025/26. Indigent benefits apply for all properties under the new R620 000 threshold.
The full details of the proposed changes arising from the court ruling will be published on 27 May for public comment, with the comment period closing on 10 June 2026. The proposed amendments cover the rate-in-the-rand, rates ratios, and tariffs for water and sanitation.
The City noted that this timeline has been carefully calibrated to allow for the lawful adoption of a budget before the new financial year commences on 1 July 2026. However, as the ruling bears no consequence for the expenditure elements of the tabled budget, no further public comment will be invited on those aspects.
“Throughout the court process, the applicants SAPOA and AfriForum acknowledged that Cape Town is a well-run metro and accepted the necessity of the City’s infrastructure budget,” the City said. “Given the court’s rejection of property-value bands as a mechanism for cross-subsidisation, the City will now engage National Treasury on alternative means of securing cross-subsidisation going forward — particularly in relation to National Treasury’s metro trading services reform initiative and the White Paper on Local Government,” the City concluded.
Public participation crucial
Jurie Ferreira, AfriForum’s regional head for the Southern Region, said the City had made the right call in not pursuing an appeal, but stressed that how it engages residents from here will matter enormously.
“We take note of the municipality’s decision and believe it is a step in the right direction. AfriForum is of the view that the judgment handed down by the three judges was delivered in a responsible and fair manner, and regards it as a meaningful outcome for ratepayers in the City. We trust that the current budget process will provide a further opportunity for constructive public participation, and that the inputs and concerns of ratepayers will be given thorough consideration to ensure their voices are adequately heard.”
Cape Town civic organisation Stop CoCT, noted the City’s statement, but said it will by no means be a minor adjustment, but a collapse of the City’s budget narrative.
The City’s media statement tries to frame this as a problem created by the Court, but that is misleading, as the Court did not create this crisis.
“For months, residents were told that property rates were going down by 10.2%, 60% of households would supposedly benefit by the tariff model that was fair and protective. Today, the City itself confirms that the 10.2% rates reduction is now being changed, the city-wide cleaning charge is going back into property rates, fixed water and sanitation charges are being restructured yet again,” says Sandra Dickson of Stop CoCT.
“The City’s media statement tries to frame this as a problem created by the Court, but that is misleading, as the Court did not create this crisis. The Court found that the City’s tariff model crossed legal boundaries. That ruling has now exposed what ratepayer organisations have warned about from the beginning, that charges were being structured in ways that disguised the real burden on households.”
Accounting gymnastics
Regarding the City’s claims that it is protecting households by increasing the rates-free rebate to R620 000, Dickson says this will only be determined after the full tables are published.
“Cape Town residents still do not know how much revenue is being clawed back, and whether middle-income homeowners are once again carrying the hidden burden,” she says.
“The City has spent months defending its budget model in public, only to now admit that the model requires major structural correction before implementation. This raises serious concerns about the reliability of the City’s earlier budget messaging. Ratepayers should not be expected to celebrate the removal of a charge on one line of a bill while being charged for it somewhere else. That is not reform, it is accounting gymnastics.”
STOP COCT has committed to scrutinising the revised budget tables upon their publication on 27 May and urges all residents to do the same.
TygerBurger has approached SAPOA for comment and is awaiting a response.
