After nearly 30 years of the existing system of local government and given the deep problems that beset most municipalities, it is time for a reset of the legislative and regulatory framework that governs it. The cabinet-approved review of the White Paper on Local Government ― released earlier this month by the department of co-operative governance and traditional affairs for public comment by the May 28 deadline ― is a comprehensive attempt to address the core problems facing this sphere of government. Drawing on 266 public submissions on a discussion document published in April 2025, the review correctly identifies the problems in municipalities. These include governance failures, weak finances, weak and unstable political leadership, poor service delivery, decaying infrastructure, ill-qualified mayoral committee members, embedded criminality and corruption combined with a culture of impunity and a complex web of legislative and regulatory oversight and reporting structures. The document makes a host of proposals, but the most significant and perhaps one of the most welcome is for amendments to the constitution. These would seek to replace the one-size-fits-all system by allowing for the introduction of a single tier of municipalities with differentiated powers and functions determined by, among other factors, their economic base, population size, rurality and levels of development and capacity. Linked to this is another proposed constitutional amendment that would empower an organ of state to determine which of the exclusive municipal functions defined by the constitution ― such as water provision, sanitation, electricity reticulation, municipal health and roads and refuse removal ― would be assigned to each municipality. It would also be possible for high-performing cities to take over national or provincial government functions such as public transport, housing and aspects of policing. Where municipalities are not capable of performing all the constitutionally assigned powers and functions, these could be taken over by the national or provincial government. As the review notes, the one-size-fits-all allocation of municipal powers is ineffective and sets many municipalities up for failure. No role is envisaged for district municipalities in the desired end state except under an alternative, transitional proposal, as the review says their objectives have not materialised.As the review notes, the one-size-fits-all allocation of municipal powers is ineffective and sets many municipalities up for failure. More controversially is the review’s suggestion that the introduction of an origin-based share of VAT revenue should be considered. The argument is that as the local economy grows and the VAT revenue increases, more state funding for poorer regions would become available through the equitable share and grants. Slicing off some VAT revenue for this purpose would reduce the size of the national cake available for distribution for government programmes, unless of course it went hand-in-hand with some reduction in the equitable share and grants allocated to VAT-funded municipalities in the budget. In which case it would just be redefining the source of the income. One advantage of having the equitable share and grants, which the review does not favour, is that it gives the National Treasury leverage over the way the funds are spent. Given the unpredictability of localised economic growth, the proposed VAT financing system would also introduce uncertainty into municipal income streams and could require the need for unbudgeted state support in the event of low growth. Another problem, which the review itself admits to, is how to develop credible rules for the geographic assignment of this VAT revenue. The VAT proposal aside, there is much of value in the review.