Friday, 29th March 2024
To guardian.ng
Search
Breaking News:

Fresh controversy rages over Lagos land use charge policy

By Bertram Nwannekanma
05 February 2018   |   4:27 am
Fresh widespread opposition may await the Lagos Government’s newly passed bill on land Use Charge policy, if indications emerging from the sector’s major players are anything to go by.The proposed law, which repealed the Land Use Charge Law 2001 and enacted Land Use Charge 2017....

Aerial view of Lagos

Fresh widespread opposition may await the Lagos Government’s newly passed bill on land Use Charge policy, if indications emerging from the sector’s major players are anything to go by.The proposed law, which repealed the Land Use Charge Law 2001 and enacted Land Use Charge 2017 and For Connected Purposes, aimed at increasing the revenue generation base of the state by bringing more houses into its net.

The 27-section bill harmonised Land Rates Law, Neighbourhood Improvement Charge Law and Tenement Rates Law. The bill, if passed into law, will end all other rates on land except the Land Use Charge.Already passed by the Lagos State’s House of Assembly and awaiting the governor’s assent, the proposed law has stirred up the hornet’s nest following some provisions; stakeholders consider unfair to property owners.

Titled: “A Bill for a Law to Provide for the Consolidation of Property and Land Based Charges and Make Provisions for the Levying and Collection of Land Use Charge in Lagos State and for Connected Purposes”,

Under the bill, “ the annual amount of the Land Use Charge payable for any Property shall be arrived at by multiplying the market value of the property by the applicable relief rate and annual charge rate, using the prescribed formular.“The land value and building value rates constituting the market value of the property shall be reviewed at least once every five years on the basis of information available to professional valuers, and may vary from area to area.

According to the bill, the Land Use Charge will be payable in respect of property that is not exempted under Section 12 of the law.Some of the properties exempted from the proposed law include property owned and occupied by a religious body and used exclusively as a place of worship or religious education.Also exempted are public cemeteries and burial grounds as well as property used as a registered educational institution certified by the commissioner to be non-profit making.

In addition, the proposed law exempts any property specifically exempted by the Executive Governor by notice published in the State Official Gazette and all palaces of recognised Obas and Chiefs in the state.However, the law made it clear that an exempted property shall become liable for Land Use Charge if the use of such property changes to one that does not qualify for exemption.

The repealed, law guiding the Land use charge (LUC) was introduced by the government of Governor Bola Tinubu and it generated serious criticisms and subsequently legal battles until the rates were reduced.Some of the critical issues were the formula the government used to arrive at the capital values of properties and non-involvement of registered estate surveyors in the process, who should determine the values, and/or arbitrary values ascribed to properties.

There were also concerns over usurpation of local council’s statutory right in collection of tenement rates and provision of amenities in the local council area.With state collecting all together, the decision on what should get to the local councils, as tenement rate has remained a big issue.

Specifically, real estate practitioners, especially valuers are querying its equitability and methods used for the classification of property, stressing that it was based on capital value, which is not applicable in other climes.For instance, a chartered estate surveyor and valuer, Chief Kola Akomolede, argued that one of the qualities of a good tax was that it should be equitable.He stressed in those interventions that the land use charge was not equitable at all and could discourage people from investing in property, which will further worsen the accommodation problem of the populace as a result of reduced supply.

Akomolede told The Guardian that it is wrong to pay an annual tax on the capital value instead of the annual value. “If you pay income tax, you pay it on annual income not on the entire income of several years you will live. Even in London, where we copied this laws, tenement rate or council tax is based on annual value not on the capital value.

“That aspect is what I don’t agree though I have not read the whole bill but that is how it was in the old law. I wrote an article criticising it and in several places I mentioned it and I still believe it is wrong. If you will recollect, this was subject to several litigations until they reduced the rate to make it very low, where as what they need to do is that they could have put the annual charge on the annual value of each property in which case if the rental income from the property is N5milion, they should base the charge on the N5 million and not on N100 million, which is the capital value of the property, that aspect is what I found very uncomfortable as far as I am concerned”, he added.

For a fellow of Nigerian Institution of Estate surveyors and Valuers (NIESV), Prince Ahmed Adepoju, the non-involvement of estate surveyors and valuers in the process is a major lacuna, which has made it a nullity.According to him, “when the first law was passed, that was our major cross that the proper thing was not done. You cannot be asking people to pay for their property using this method because if you are talking about property market value, you are talking about the economy of the property itself.

“When you look at that, you will not know the basis they used to value the property. It is not a welcome law to us, because we were not consulted”, he noted.
In tacit acquiescence to Adepoju’s position, the chairman of the branch of Nigerian Institution of Estate surveyors and Valuers (NIESV), Olurogba Orimalade, said it is a pity that the institution was not consulted before such bill was passed.According to him, ‘nothing has change either before or during the re-enactment of the law to change our position that the formula being used is what we don’t understand. ‘It beats our imagination. We don’t know how they come about this formula being used to levy people’.

He said: “ We did make our position known that there has to be clarity especially to the professionals that, it is their discipline and their training to be advising government on how the levy should be made. “ We only got notice of it some few days before the public hearing that was held at the state house of assembly. Be that it may, we stated our position and forwarded it to them. Our position still remains the same. We are calling on government to come and sit down with us from the look of it, at the end of the day, the professionals will be called to look at what government is trying to do in order to justify it are the valuers.

“If the valuers and institution itself were not involved or were not carried along properly in arriving at the formula, then I think it brings a lot of questions to be asked on the process. All over the world including the United kingdom, there is no law that has to do with land administrations and matters that you will not consult the RICS, that is the Royal Institution of Chartered Surveyors, it is not about the RICS calling government. That government could roll out something as fundamental as this without consulting us , is not proper.

“So as far as we are concerned, a lot of questions still need to be asked, the formula is a formula that we still don’t understand how government arrived at to levy people through the amalgamation of all the taxes. “Our position has been clear from day one, because you are bringing tenement rates, ground rates and all that under one roof, there are certain things by the laws of the land , that are made to be charged by local government, this is now being brought together under one roof. There is neigbhourhood charge, which formed part of the land use charge, which should be even separated from the land use charge.

For us, there are so many issues and areas, so it is not today, it has started, and our position is that we understand what government is trying to do.“ I think, it was only nice to tell them that before you venture into areas like this, they should consult properly the institution, that is a key stakeholders on this, it is just that we are brought in early to look at this”, he added. Another fellow of NIESV, Ben Oshadiya said consolidation of the levy would be good, if only they will give local governments their dues after consolidation.

According to him, they should allow the local council to function; they can only function when they give them part of the money they are consolidating.
“ Consolidation is good, no doubt because it will reduce multiplicity, the only thing is that there is a problem with the formula for the computation.They just look at the property and said this one will be able to generate so much, it is not correct in all cases. “ The issue is let them spend the money well, when people see the way they spent the money, and all organs of government are functioning well, nobody will oppose it but the formula for calculation should be equitable”, he added.

Oshadiya stressed that if the formula is what government should be able to defend, people will be ready to pay, while government should make judicious use of the tax to provide the requisite services.“It is no use paying land use charge, when you still pay your refuse, when you have to connect your water, when you have to construct the road leading to your home virtually by yourself or to do those things government should do for you.

“If they make sure that everything is okay, everybody will be wiling to cooperate with government. While people complain is that when development do not go round, there are many areas where there are no government impact, they have to spread the development”, he added.

0 Comments