PORT ST JOHNS, Eastern Cape — The National Treasury funding freeze affecting 69 local authorities has placed the Port St Johns municipality under intense financial scrutiny, prompting local leadership to publicly address a R29 million historical tax liability while pledging to shield rural residents from service disruptions.
The national department confirmed it is temporarily holding back a portion of the July financial allocations destined for the 69 selected councils. Despite the financial clampdown, officials maintain that basic service delivery will remain unaffected.
During a recent media briefing, the Deputy Director-General (DDG) of the National Treasury explained that the department is actively engaging with the affected municipalities. The DDG noted that the primary objective is to establish concrete debt-repayment strategies before releasing the withheld cash, particularly to clear arrears owed to critical stakeholders like Eskom and Amatola Water.
The financial squeeze hits Port St Johns particularly hard. Situated in the deep rural outskirts of the Eastern Cape, the local council operates on a significantly tighter budget compared to major urban centers like the Nelson Mandela Bay and Buffalo City metros. Consequently, the town relies heavily on the unconditional grant for basic services to maintain its infrastructure and keep the community running.
In a detailed three-page response and subsequent media address, the local council stated it is committed to ongoing dialogue with the national department to resolve the financial disputes and finalize the requested payment plans.
Clarifying the core of the Treasury’s concerns, the Acting Municipal Manager of Port St Johns explained that the flagged issue stems from a historical Value-Added Tax (VAT) liability involving the South African Revenue Service (SARS). According to the Acting Municipal Manager, the disputed amount originated from VAT-related transactions spanning multiple financial years. Following a rigorous audit and formal objection process, the initial massive figure was successfully reduced to R29 million. The local authority has now signed a formal repayment agreement with SARS to systematically clear this balance.
Reassuring the public, the Acting Municipal Manager emphasized that essential operations—including water and sanitation provision, municipal operations, infrastructure projects, staff salaries, and payments to service providers—will continue without interruption and remain a top priority.
However, the financial uncertainty has sparked anxiety among the local populace. Because the rural community depends entirely on the local council for electricity, water, and sanitation, residents fear that the municipality might be forced to implement tariff hikes or other financial interventions to generate alternative revenue and ease its accumulated financial burden.
Adding to the pressure, the financial controversy coincides with high-stakes legislative oversight. The council’s accounting officer (the municipal manager) and the executive mayor are currently engaged in urgent closed-door sessions with the provincial legislature’s portfolio committee on cooperative governance and traditional affairs. The lawmakers are grilling the municipal leaders on the exact same governance and financial shortcomings highlighted by the national department.
Ultimately, the national department insists that viable, stone-cold solutions must be finalized and agreed upon before the July grants are unlocked, leaving the 69 affected councils racing to secure their financial futures.