Measuring Supply and Demand for Public Services Assignment

Assignment Task

Sources of Funding

1. Whilst taxes are usually the main source of revenue for governments, they are by no means the only source, and, they are not necessarily the best means to achieving a balance of supply and demand of public services.

• In the public sector context, a user charge is a fee charged for the provision of a service or goods by the government (at whatever level) to a consumer.
• taxes, in the case of user charges, there is a direct link between the payment made, and the service received.
• In principle, user charges tie the amount paid directly to the amount of a service a consumer uses.
• And, also unlike taxes, user charges are not compulsory.
• It is entirely up to the consumer to decide whether or not to make use of the service, and only if it is used, is any charge levied. This is said to promote responsiveness to consumer needs (Fjelstad 2001

2. It will be remembered that in a previous lecture, the concept of “public goods” was discussed.

• Strictly speaking, even though services which are charged for may be provided by government, they are not “public goods.”
• This is because these charges are levied where exclusion is possible.

3. User fees are mostly encountered in South Africa at local level; examples are:

• Electricity
• Water
• Sewerage
• Street cleaning
• Fire services
• Facility rental

4. Section 74 of the Act provides that a municipal council must adopt and implement a tariff policy on the levying of fees for municipal services.

• Section 75A of the Local Government: Municipal Systems Act deals with the general power of municipalities to levy and recover fees, charges and tariffs.
• It provides that a municipality may levy and recover fees, charges or tariffs in respect of any function or service of the municipality, and recover collection charges and interest on any outstanding amount.

5. The National Treasury reported that municipalities across South Africa were owed R 191.5 billion for services (National Treasury 2020). Of this amount, only R33.4 billion – less than one fifth – was considered realistically collectable.

• The reasons for the failure to collect are varied, ranging from inadequate accounting systems, to lack of capacity, and lack of political will to enforce collection processes.

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