Lagos, Edo Turn To Land, Property Tax To Shore-up Revenue
MANY states have taken after Lagos, which has been collecting levies from land and property owners in order to shore up their Internally Generated Revenue (IGR).
The new revenue drive is occasioned by dwindling fortunes from the Federation Account as a result of the continued slide in the price of crude.
The Lagos State Government began the implementation of its land use charge law in 2011, making it mandatory for landed property owners to pay a percentage of the value of their property to the government annually.
The land use charge of Lagos State is a consolidation of all property and land based charges, including neighbourhood improvement and tenement rate charges.
Meanwhile, residents are complaining of excess charges due to wrong valuation and classification of their property. To many, the formula used for the charges by the government is not known, even as they urged the government to reduce the charges for ease of payment, considering the number of houses in the state.
Lagos residents are besieging land use charge offices everyday with complaints of over-billing, as they have inundated the offices, including the main office at the Ministry of Finance, Alausa, with applications for review.
At the land use charge office last Thursday, a landlord from Shangisha said he was asked to pay N350, 000.
‘‘They say it is accumulated charges of two years. But how can they say it is accumulated when they did not bring the bill to me. They are looking for money, so they should distribute the bill like the electricity people are doing. If they need money, then, they should go for the money. The most annoying thing is that nobody knows how they arrived at the charges they are collecting. I live with my family and business is no longer as flourishing as the time I built the house, so where do they want me to get the money to pay. I am here to find out what they can do. They have to review this charge if they want me to pay,” said the elderly man who gave his name as Mr. Tunde Ashiru.
At Ikorodu, residents besieged the land use office on Lagos Road, after the rumour that government might seal off defaulting property last Monday. They stormed the office to obtain their bills, which they said were not distributed.
Mr. Banjoko Hassan, of Adeyiga Ibrahim Street, Ikorodu said he had never been served notice of payment since they started the collection.
‘‘I live at No. 14 Adeyiga Ibrahim Street. I have been hearing about land use charge and nobody has brought anything like that to my house. But yesterday, my neighbour told me he had gone to collect his own charge because of the rumour that government is coming to seal off houses in Ikorodu. But you can see now, that there are so many people here with the same case. If they want us to pay, they should distribute the bills,” he said.
But Mr. Iwobi Johnson, who also visited the office, said he came for a review of his charge.
‘‘I have my house on Ishawo Road in Agric area of Ikorodu. I just converted my house to owner-occupier by demolishing all the stalls. I no longer have tenants, so I want a review from commercial to residential so that my charges will reduce, I think that is the right thing to do.”
At Ilupeju Office, there were heaps of bills not distributed. But officers were kind enough to search and distribute on demand. Although the rate of compliance in the area is high, many called for a downward review of the charges.
‘‘I am paying N23,000 and my house is small. Supposing every house in Lagos is paying at least N3,000 and we have not less than 3 million houses in Lagos alone, Lagos should be collecting trillions of naira every year, yet the roads are bad everywhere, there is no pipe borne water in more than three quarter of the city. If they collect the money, they should use it to provide infrastructure for the people.
Going by figures from the Lagos State geographic System in 2011, there are no fewer than 1, 194, 525 houses in the metropolis. The number may have increased by a quarter now.
An official of the Ministry of Finance gave the formula used to arrive at the charges. He said the state government is trying to avoid the use of force in the collection of the property levy, but to engage residents, through town hall meetings and consultative forums to persuade them on the need to comply.
“Many things were taken into consideration before arriving at the formula for the charges. The charge is based on the percentage of assessed value of the property, the land area, the average value of the land parcel, the size of the building and property code rate. In that case, the value varies from place to place. You don’t expect a house in Ikoyi to have the same value with the house in Egbeda, for instance. The government is applying human face in the implementation. So it is reluctant to use force for compliance. Instead, it intends to engage the people and persuade them at town hall meetings and consultative forums. The collection is being shared between the Lagos State government and the local governments every month as agreed at the beginning,” he said he said.
In Edo State, residents have been protesting the introduction of land Use Charge, which specifies fees for some category of houses, particularly in high brow and low density areas in urban areas.
The Land Use law was passed in 2012, but its implementation began only recently. Many of the antagonists, mainly the civil society groups allege that the law was made against perceived political opponents and certain individuals.
They also believe that the Charge is a violation of the existing Land Use Act and that it could usurp the powers of local governments to collect tenement rates.
The law indicates that real estate valuers would be engaged to assess properties and recommend charges as appropriate. For instance, the law says for any commercial property valued in the affected areas , it would pay 0.422 per cent per annum to the government, while residential property with commercial attachments, would pay 0.20 per cent under the law. Industrial premises with manufacturing concern are expected to pay 0.25 per cent and owners occupied residential property would pay 0.04 per cent of the value per annum.
The law exempted properties owned and occupied by religious bodies, approved exclusively for public worship “and or used for non profit making religious education, public cemeteries and burial grounds, public libraries, all official palaces of recognised traditional rulers in the state, any property specifically exempted by the state governor, which must be gazetted.
Other properties exempted from the payment of property charge, according to the law, are land in the size of 100ft by 100ft maximum in a non-choice area of an urban Area, same measurement of land in a non-choice area in rural settings, community property solely for meetings, activities and events, owner occupier pensioner property and owner occupier over 60 years old and family compounds.
The law also empowers the governor to grant partial relief for some properties occupied by non profit organisations, places used for sports, games, athletics, recreation activities.
But the Public Relations Officer of Edo Civil Society Organisations, Osazee Edigin one of the major opposition of the law said they expected the government to provide at least 80 per cent of needed infrastructure for the people before additional taxes. He said for local government to surrender their responsibility to the state in terms of tenement rate as recommended by the law was a negation of their agitation for local government autonomy.
“We are concerned about the economic effect of this Land Use charge, because once this is imposed, is going to get back on the people. It will cause inflation, things are going to be expensive in the market and looking at the dwindling economy in the country today, if the state government is complaining of dwindling economy, one wonders what the common man is going through. The state government should improve other sectors for revenue generation. The state government should provide at least 80 percent of amenities needed by the people before it can introduce the charge,” he insisted.
But the former Minister of State for Works, Dr Chris Ogiemwonyi, one of the residents in GRA area of Benin City, said the charge is not peculiar to Edo State.
“People are just doing this bandwagon effect. My friends are crying and you want to join the cry. By my training, I prefer to go to the Ministry of Justice, get a copy of the law and study it. From those who have studied it, they know it is not for the whole state, it is not for the whole city, it is for the low density area that they are talking about and the question you will ask yourself is, is it new, does it exist in other parts of the world? It is not new. Even those that have houses in London, not on the ground maybe in the 9th floor, they still pay. Those that have flats in New York as compact as the city is, also pay. I think we should commend the governor for being creative in IGR and I think what people should ask is the usage of the money.”
In an exclusive chat with The Guardian on the matter, the state governor, Comrade Adams Oshiomhole said the law has come to stay and that those protesting were being misled.
“So when we resolved to introduce the land use charge, of course, we know that those with properties will fight because the more properties they have, the more burden they will carry under the law. It is based on per square metre; it is also based on number of houses and the nature of houses that you have. So it wasn’t something that we were surprised about. Everything that is good for the people, they will not accept it, but they will be compelled to accept it. People pay tax not because they want to, they pay tax because they know that if they don’t they will go to prison, that is how it is elsewhere. Land Use Charge has come to stay, if you don’t want to pay, you can avoid it by not owning landed property.”