VAT

Top stories 2008: City Power's VAT rip-off

Steven Jones
03 December 2008

Do you ever check the calculations on your water and lights bills? I did recently, and was flabbergasted. City Power is overcharging its consumers on VAT - and could be raking in millions.

I was busy going through that painful monthly ritual common to all households, namely "paying the bills", and as I do each month, I give each account a cursory glance to make sure that what I am being charged appears reasonable on the face of it.  However, although I am an accountant by profession, I am not in the habit of whipping out my trusty calculator to recalculate each bill (contrary to popular belief).

But when I had a look at my father-in-law's bill from the City of Johannesburg for November, something just did not look right, in that the total charge of R576,13 included VAT of R213,50!  Since the actual net charge for electricity excluding VAT was R362,63, this means that VAT has been levied at a whopping 59%!



Now I know that the South African Revenue Service (Sars) has been releasing a lot of documentation of late, but believe me, if the VAT rate had been increased over four-fold, I would have noticed it!  In fact, the whole of South Africa - all 48m of us - would have been toyi-toyi'ing in the streets right now.

Thinking that this might be an isolated incident, I decided to check my own account.  Here the overcharge was not so bad - here, my electricity bill of R418,69 only attracted VAT at 28%.  Tiered rates, perhaps?

Getting quite irate by this stage, I decided to go back a couple of months.  Once again using my father-in-law's account as a benchmark, the October electricity was R470,46 on which VAT at 14,48% was charged, September was R534,58 on which the VAT was 14,5%, August was R427,37 and the VAT was 15,13%, by which stage I had to be physically restrained from punching my laptop.

Given that it is only fair to ask those responsible to explain themselves (and pass a nice fat credit in the process), I decided to call the Joburg Connect call centre on (011) 3755555.  The first time I called, I pressed "1" for billing enquiries, and was left listening to inane music for five minutes.  Patience not being my strong point, I hung up and tried again, and this time the ‘phone just kept ringing...

Wanting to give City Power the benefit of the doubt, and thinking that these incidents were still isolated ones, I decided to check out my church's account for October (I haven't seen November's account yet, since they go directly to the treasurer), and, lo and behold, the church has also been paying VAT at 14,5%.

Now here's where my cynical side comes in.  Multiply the extra half-percent in VAT by the number of City Power consumers, and the money involved could be quite staggering.  In fact, it would be interesting to see how long this has been going on.  If my November account had not gone so out of whack with the VAT, I would never have picked up the overcharge.

My next question is why it would only be on City Power?  On the same bill, using (presumably) the same systems, the VAT charges for Johannesburg Water and PikiTup (refuse removal) are absolutely spot-on at 14%.

Finally, has Sars been benefitting from the extra VAT collected?  Or has it disappeared somewhere in the dark depths of City Power's accounting systems?

MoneywebTax will continue to attempt to contact City Power concerning this matter, and will also be taking it up with Sars.  In the meantime, if you have experienced similar overcharges on your City Power / City of Johannesburg utility accounts, please comment below.

Write to Steven Jones: steven@moneywebtax.co.za



 

Comments

 
 responses to this article

umm...
hectic

by dude on December 03 2008, 11:46
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VAT overcharge
Man all I can say is thank god for the accountants out there. I went back and checked my account and low and behold - 14,587% on my electricity bill. This is constant for the last 2 months statements. I am now going to produce a spread sheet and go back a . .more

by Gilbert on December 03 2008, 11:47
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VAT on City power
Same problem. Only City Power charge on rates and taxes bill the VAT is overcharged. Nov 15.5%, Oct 14.5%, Sep 14.5%, Aug 15.2%

by Robbed on December 03 2008, 11:57
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VAT Charges - Ripoff Indeed
Looking at your article, I decided to look at my own VAT charges- well wouldn't you just know - for November, I have a levy charge of R181.18, an adjustment of R227.33, a service charge of R147.12, and VAT charges of R273.29. I think its time for an . .more

by greykie on December 03 2008, 12:05
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Overcharge
It appears that they're laving out one or lines off the statement that make it appear that the calc is incorrect. Once they print these lines, the statement will appear correct

by Foxman on December 03 2008, 12:15
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VAT overcharge
VAT on my october electricity consumption line charged at 40%. Sent them an email, they acknowledge and indicated they will correct, will wait and see. Question is tax payers have just spent millions of Rand to upgrade to a new state of the art system, . .more

by Marius on December 03 2008, 12:17
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The Shysters
Oct shows 18.43% and Sept 18.35% so need to do the spreadshit thing too....
More like 5h1ty Power me thinks, and if you get eStatements, the email address provided statement@joburg.org.za bounces back as non-existent!

by Dilligaff on December 03 2008, 12:30
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What?
Don't thank SAP, thank Affirmative Action!

by Neo on December 03 2008, 12:37
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Cant we find a hungry lawyer and
bring a class action against them?

by Litigious on December 03 2008, 12:59
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Nevermind VAT, thats the mickey-mouse part of it.
The real sucker is the accumulated increase in rates in taxes since many years ago as a penalty for the rich to subsidize the poor.

You will have to buy a scientific calculator to carry the sum, an normal one won't do.

Remember old . .more

by IT bean counter on December 03 2008, 13:01
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in the U.S....
this would give rise to a massive class action suite.
Not being a rate-payer in Jhb I cannot bind myself to this action but I certainly hope you get something really BIG going here.
These charlatans, in my opinion, neither care about what they . .more

by Plutarch on December 03 2008, 13:06
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Sundry Admin Fee
My statement now includes a Sundry Admin Fee, what does this relate too? Sadly there seems to be no accountability with the COJ, all calls and emails are unanswered..

by Kevin Black on December 03 2008, 13:11
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VAT
Calculation shows my VAT rate is 42.9%.

Thanks for the alert

by GTR on December 03 2008, 13:13
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P******* City Power
Hey Steven,
The appalling state of City Power is something that you and the rest of us at Moneyweb need to continue highlighting. The VAT charged is outrageous. Thank goodness you checked - and have others doing the same. But I shudder to think how . .more

by Alec Hogg on December 03 2008, 13:25
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To Foxman
Nope - must disagree with you there. The amounts under "Subtotal" add up correctly to the "Total Amount", so it's not simply a case of "lines being left off". Besides, there is a "Consumption Charge", a "Service Charge", and a "Demand side management . .more

by Steven Jones on December 03 2008, 13:32
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We know their billing systems are a phukk-up.
This is not news.

Reporting it will also result in no outcome because there is nobody to take accountability.

Best to just forget about it and get on with your lives.

by Munch on December 03 2008, 13:39
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Also wrong on our bill
How annoying! VAT on our bill has not been correct since July 2008....

by csed on December 03 2008, 13:54
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Municipal bill
I have had endless problems with city of JHB and have logged online disputes but I don't think they actually do anything about it because nothing has been sorted out for months.

I have notice this over charging a while back . .more

by Midrand Resident on December 03 2008, 14:01
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Real rip-off
I stay in a 3 bedroom flat, our elec amount to R450-00 p.m. We all out during the day(varsity students).I was told that we don't even qualify for free units..I feel like we are just being ripped-off

by Nthabi on December 03 2008, 14:31
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Line Items
Add VAT PER LINE-ITEM and not on the sub-total and you will probably balance correctly. Although the R362,63 in the article is suspicious...

by Anthony on December 03 2008, 14:42
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Munch - you've said it.
It's Africa: things don't work, people don't work, and corruption and nepotism are endemic. Accountability is just a meaningless word on equally meaningless performance appraisals.

by Darwon on December 03 2008, 14:47
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First the cheers. Then the tears.
If I remember correctly weren't it the Joburgers who comprised the biggest Prog community in S.A. to vote yes in 1994? So what are you complaining about? You now have your one-man-one-vote. Worst - you still don't seem to have learned out of this . .more

by Quid pro quo on December 03 2008, 15:08
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THIS City works for you....
Just a subtle reminder (read: challenge) that this doesnt happen in Cape Town (who also run SAP for the recond). Anyone who finds a VAT discrepancy in CPT is invited to post demeaning comments about my loyatly to this City.

by MotoMike on December 03 2008, 15:15
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To Anthony
Anthony, whichever way you add the figures up and down, the total still comes to R362.63, and 14% thereof is R50.77, NOT R213.50.

The fact remains that there is only one standard rate of VAT in terms of South African law, which is 14%. . .more

by Steven Jones on December 03 2008, 15:18
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rip off
what about the R 200.00 service on the monthly account

by pramod Otha, on December 03 2008, 15:21
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same ripoff
I had the same experience, a whopping, close to 50% in VAT in fact. Tried to contact the council, but no luck.

by kath on December 03 2008, 17:00
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More Rip - Off
The Vat on Sewerage and Refuse is also illegal as they constitute taxes in terms of recent court decisions. As taxes, they dont attract VAT

by Simpiwe on December 03 2008, 18:37
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Amazing
I have been watching this column periodically during the day.
I fully expected some big-belly from the City ( kraal, whatever) to come bursting onto the scene with full fanfare announcing a complete forensic audit and immediate hiring of a couple of . .more

by Cassandra on December 03 2008, 19:14
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City Power Plus
I've not had any electricity charges since the new format account was implemented. The more I try to get this rectified, the more I get ignored. I just don't know what to do...

by Winner on December 03 2008, 20:36
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Someone Please take action!
Someone needs to please take action. This stealing needs to be refunded to its customers!

by Anon on December 03 2008, 22:09
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STOP WHINGING AND WHINNING
DO SOMETING........................LIKE NOTIFY EVERYBODY YOU KNOW, ABOUT THIS LEGALIZED THEFT AND THEN...........................STOP PAYING, WHILE APPLYING FOR AN URGENT INDIDICT TO STOP COJ FROM CUTTING YOU OFF UNTIL THEY CORRECT THE PROBLEM. . .more

by Not Fooled on December 03 2008, 22:53
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Fighting back
I wont do this (as I like to stay below the radar) but if you get no joy from city power why not take the mayor of Johannesburg to small claims court in his PERSONAL capacity? Amount below R6000 and NO LAWYERS ALLOWED and if he doesnt pitch after summons . .more

by andrewa on December 04 2008, 00:09
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Great money making opportunity
Been overcharged since Aug, which is about time of all those extra charges. Nov VAT was 23.54%! My question why all those xtra charges of adjustments, service charges, demand side levies??? If I could bank R1 from each customer each month I would not need . .more

by AndreS on December 04 2008, 08:26
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City Power VAT Ripoff
Thanks for pointing this out. I've jst looked at my new statement and the VAT on the power is more than 28%. City power will be hearing from me!

by grant on December 04 2008, 08:37
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Missing line item
I noticed this about 3 months ago. As one of the earlier comments said, it seems as if a line item has not been printed on the statement. The missing item is presumably VATable.

by Accountant on December 04 2008, 08:52
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Also overcharged
I too have been overcharged - near 40% of my electricity bill in November - thanks for pointing this opt

by JD on December 04 2008, 09:02
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This takes the cup
HA HA HA, I just received my November statement City Power vat at 1113% and yes there are three 1s in the figure

by Phihlelo Matjekana on December 04 2008, 09:39
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CITY POWER VAT RIPOFF
I have just received my November statement and I have been charged 69% - no, not a typing error, 69% VAT on an electricity bill of R440,33 the VAT I have been charged is R307,77. In my calculations 14% VAT on R440,33 is R61,65. I have been overcharged by . .more

by Lana Hughes on December 04 2008, 09:44
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MotoMike
Belville - does that also classify as CT? For that is the biggest knob company around. Its tentacles reach even into D'ville. No account, wrong account, double account, skipped account, incorrectly rectified account, outstanding account. Half scared to . .more

by SAP and CT on December 04 2008, 10:12
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City of JHB - power
I just received my Nov 2008 statement. Charges are as follows, consumption charge for 67 days?? R761, 76. reversal of interim charge -R318,56. Adjustments -R150,77. Service charge ?? R147,12. Demand side management levy ???R38,26 ....all these charges . .more

by A Dessai on December 04 2008, 10:20
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Overcharged!
charged me 24%! on November account!

by Henko Venter on December 04 2008, 10:32
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Service Charge
Does anyone know why we have to pay a service charge of R147. - and then we get charged VAT on the Electricity Service Charge?


by Mustafaa J on December 04 2008, 10:49
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Joburg Connect Response
There's another serious problem highlighted in this article, which has been kind of overshadowed by the outrageous VAT calculation issue. The problem is that Joburg Connect do not seem to have any capacity (or intention?) of fulfilling the primary . .more

by Robert S on December 04 2008, 11:18
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What's the solution??
Since the new system of rates came into play in June I have been charged "VACANT LAND" rates. This is despite the fact that I have been living there for over 6 years, the entire estate is built up and the municipal value is market related.
I have . .more

by Melissa on December 04 2008, 11:31
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When you pay your next bill deduct all the overcharges for the past few months / years. It'll get th...
This I guarantee.

by Power Hungry on December 04 2008, 11:33
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Overcharged
Just checked November statement. VAT of R354.33 on a net amount of R507.09. That's 69.9% !!!!!!!!

by Jo Nathan on December 04 2008, 12:00
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Exactly as it stands written
Joburg -a world class AFRICAN city. Originally the name came from a German pioneer. The Germans do things a bit quicker.

by Truth is out there on December 04 2008, 12:22
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@ Steven Jones
So you actually did not obtain an explanation from COJ BEFORE you wrote this article?

Is this not a bit irresponsible? Writing an article like this, when there may be a very logical explanation?

You have created a mob here.

by Donkie on December 04 2008, 12:36
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Freakin Vat rip off
i have experienced exactly the same problem my bill has never been lower then 2500 a month for the past few months and i have a two roomed house, they should be taken to court

by rido on December 04 2008, 13:27
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Two Separate Errors
A couple of months ago a new charge 'Demand side management levy' was sneaked onto our statements. It was not shown as a separate line item under the City Power section, but this 'ghost' amount was taken into account for the VAT calculation and included . .more

by Jacqui on December 04 2008, 13:35
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Ridiculous!
I'm so glad I saw this article. Incidentally, this morning I tried to contact "Joburg Connect" to find out more about the Electricity "Service Fee" (if it's a meter reading fee, they don't even physically check that every month), "City Cleaning Levy" and . .more

by Nurse on December 04 2008, 14:17
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The Awakening
Did you all really believe that after 1994 things will go rocking and just get better and better? It now must be like an awakening after a massive babelaas!

by Rumpelstilkin on December 04 2008, 14:27
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Tax Fraud
Why can't we just report them to SARS for Tax fraud?? It seems to only be on the City Power side of things and their VAT # is 4710191182

by Nurse on December 04 2008, 14:31
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and cough up
let's see. how are we going to screw customers even more than we are already. i know, let's increase the vat percentage on all our invoices.

by takeVAT on December 04 2008, 14:32
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Rude Awakening
I am both horrified and shocked. There has to be some recourse and I believe a class action would be the way to go. Anyone know of a good attorney who would get all fired up about this?

by Catherine Clark on December 04 2008, 14:36
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Lodge Fraud Complaint with SARS
I would recommend that all people with this VAT problem (I suppose that means everybody!) open a case of fraud up with SARS against City Power. I just did - SARS fraud line is 0800 00 28 70 and get a ref #. That just may rock the boat a bit...

by Nurse on December 04 2008, 14:41
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Monopoly
Have also queried my account with them (b4 reading this article) and no response just yet, just how valid/legal are these statements? Probably one of those "pay first and sort out later" scenarios, which means K** en betaal, nice when you have the . .more

by Swannie on December 04 2008, 15:04
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Any response yet?
Has city power commented yet? I have submitted a complaint to them and wait.
Thanks for pointing this out

by Perplexed on December 04 2008, 15:42
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RIPPED OFF!!
If it was 14.5% (like it was the last 4 months) I would not even have worried, this month it is 56.5%!! Bite me City Power!!

by anon on December 04 2008, 15:52
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VAT overcharge
Thanks for pointing that out. My net electricity charge for Nov was R95,39, after reversals and adjustments, plus "service charge" and "demand side management levy". VAT came to R237.29 or 249% of the net charge!

by Mike on December 04 2008, 15:59
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Legal considerations
Heard somewhere on radio (think it was someone from the ratpayers association) that it is illegal to boycott municipalities by withholding rates and taxes. You have to pay regardless. But the rate payers assoc. represenative says converse you pay for a . .more

by Wannabee rightwing rocker and rocking chair lawyer on December 04 2008, 16:01
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City Power VAT
I checked my November statement and lo and behold I found the following under electricity: Consumption charge = R 241.18, Adjustment Electricity = - R 522.09, Vat 14% (!!!) = R 570.84 which makes a total amount of R 289.93. In other words I should be . .more

by Luc De Brabander on December 04 2008, 16:21
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To Donkie
I did in fact TRY to obtain an explanation from City Power before publishing the article, but could not get through to their Call Centre number. Staff members from Moneyweb have also been trying constantly to get hold of City Power since about lunchtime . .more

by Steven Jones on December 04 2008, 16:48
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To Nurse
We have in fact reported this matter to SARS. Their spokesman, Adrian Lackay, has indicated that SARS would in fact be investigating this matter, since charging more than 14% VAT is illegal.

As soon as MoneywebTax has received any feedback . .more

by Steven Jones on December 04 2008, 16:50
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VAT Overcharge
Unbelievable. I got my Nov account today and also saw something awry ... lo and behold 22.12% in Nov, 14.61% in Oct, 14.60% in Sept and 16.40% in August. Reeks of fraud to me ......

by Ripped off ... and Pi**ed off ... on December 04 2008, 19:27
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VAT overcharge on City Power
When I finally managed to get through to City Power the hapless call centre agent had entirely dirrent figures from those reflected on my account and told me that I was not to worry as that money was not actually going to VAT but to back dated tariff . .more

by Lynne Sampson on December 04 2008, 20:16
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VAT Overcharge
My March bill for City Power was R193, my November was R709, and I used less Power. The cost has steadily increased since the beginning of the year. Oh, an my VAT for the last 2 months is about R20 out.

by Kevin on December 04 2008, 23:53
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VAT Overcharged
Since August 2008 the VAT on my electricity has been overcharged by about R5 every month. How will we get our money back?

by Magda Hatton-Jones on December 05 2008, 08:33
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VAT Overcharge
On checking my November account I find have been charged an 'adjustment' of R927 plus 24% VAT!

by Lyn Muskett on December 05 2008, 11:19
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city power and all gov agencies
whats new just another bunch of crims in our bannana republic.....
fashionable to be criminal, the pres to be is one.

by asd on December 05 2008, 12:39
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Vat Overcharge!
20% more on mine!! For how long has this been going on!!???

by Pvdw on December 05 2008, 16:24
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vat
They call themselves "A World Class African City". Think the African part is correct

by mike on December 06 2008, 09:02
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SARS Fraud Case
Well the more the merrier who do it - I have laid a case of fraud with SARS 'cos that's exactly what it is! I want my refund now, not in 12 month's time (which is their usual turn-aroud time). When I bought a property in 2004, it took just over a year . .more

by To Steven Jones on December 06 2008, 09:16
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ADJUSTMENT ELECTRICITY???????
Anyone know what this Adjustment Electricity is? - I have been billed R598 (excl. VAT @ ?%) for November

by Nurse on December 06 2008, 09:18
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Additional Vat Paid on Electricity
Do you think it worth while to put in a deduction on our Personal Tax Returns for the additional Vat paid on our personal electricity. Let Trevor fight the council for the money deducted. We can claim for medical why not overcharges. If enough people do . .more

by Penny McBride on December 06 2008, 09:21
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ADJUSTMENT ELECTRICITY???????
This is totaly unacceptable to over charge people like that, i am staying in a Town house Aug my electricity bill was 128.82 which is fair coz i'm alone and during the day i'm at work and i don't cook everyday, all of a sidden in Sep my elec bill was . .more

by tm on December 09 2008, 08:44
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tm
This is totaly unacceptable to over charge people like that, i am staying in a Town house Aug my electricity bill was 128.82 which is fair coz i'm alone and during the day i'm at work and i don't cook everyday, all of a sudden in Sep my elec bill was . .more

by ADJUSTMENT ELECTRICITY??????? on December 09 2008, 08:51
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vat
burn them down

by joe van zijl on December 09 2008, 10:17
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R175 levy from NOWHERE????
ANd now since November City Power is adding R175 to my - R120 bill...wtf is this?????????

Is overcharing on VAT not bringing them enough money in anymore?

by Rolf on December 09 2008, 11:59
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citi power
R47 ooo IN AREAS ON MY AC.They cant show me statements and are now thraetning to cut my water. where is this country going. I paid R144ooo for water and electricity in the last 3 years about R100 000 more than the previous owners and I am nearly never . .more

by anton wehmeyer on January 07 2009, 18:22
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citi power
I have issues with citi power and the many codes on my account . i am going to make a spread sheet of all the cost and go to their office and play it by the book. Complaining on line and stating how much they have been off by does not help. As for . .more

by bemused on April 22 2009, 14:36
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citi power
before you go on civil suit , remember they will use your tax money to settle your law suit bill, then increase your tax a year later or sneak in some servie cost , to pay the legal bills. has anyone done anyhting pragmatic ?for everyone who has posted a . .more

by pragmatic on April 22 2009, 14:43
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