Published On: Sun, Mar 11th, 2018

Lagosians reject controversial land use charge

With the introduction of Land Use Charge Law 2018, Lagos State government may have overreached itself, and definitely sailing in troubled waters as Lagosians reject the law, and threatening to vote out anti-people’s party in government behind the edict. Adebayo Obajemu reports

Since the  controversial Land Use Charge Law 2018 was signed given legal teeth to the new land charges in the state, social and mainstream media has been awash with condemnations from all segments of the society, including business community, with many people threatening to campaign against APC in Lagos. Lagos residents are demanding no less than reversal of the increase in Land Use Charge, LUC, slammed on land/building owners in Lagos by administration of Governor Akinwunmi Ambode.

Leading the opposition to the levy in the state are opposition political parties, residents of highbrow estates in Lagos, business and professional associations. The Organised Private Sector, OPS has already indicated that it will resist the review which it said has led to 200 percent increase in Land Use Charge.

One of the fledgling political party, Action Democratic Party (ADP) for instance, described the increase in the land use charges by Ambode as obnoxious, while claiming that the new levy would geometrically increase the level of hardship residents of the state face. Otunba Oluyemi , President of the Yoruba Youth Agenda , and a chieftain of the party told BusinessHallmark that “this APC government is anti- people, and there is a need to resist this anti- progress agenda of Ambode and his capitalist backers, we know them.’

Lagos Island                                                                  AFRICA.COM

ADP also argued that the increase would lead to an upsurge in rents paid by Lagosians and subsequently render many homeless. The party added that government exists for the people and people are not supposed to suffer in the hands of those who are serving them as a result of callous policies as being done by the government of Lagos state.

“If the state government is out on an aggressive revenue drive, it should not be done in a manner that will further wreck the already poor and struggling majority in the state”, ADP added.

Joining the fray is the Nigeria Bar Association (NBA), Ikeja branch, which has expressed displeasure at the new charges which it argued, will lead to further impoverishment of over 17 million Lagosians. NBA maintained that the poor economy of the country is already negatively affecting the people while urging the governor to be sensitive in implementing policies that would gravely affect the residents of the state.

Mr. Adesina Ogunlana, Chairman of Ikeja branch of NBA accused the governor of turning the state into a ‘toxic environment and living hell for its residents’ because of uncontrolled imposition of taxes.

“It is clear that if these regimes of tax are allowed to stay, Lagos state would have been turned into a toxic environment and a living hell. Even ordinarily in Lagos state, accommodation is not cheap and easily affordable i.e. for those who have the parks and under the bridge to sleep and dwell.”

Adesina further asserted that the governor should not hide under the umbrella of working to develop Lagos into a mega-smart city to kill Lagosians with ‘pharaonic taxes.’

The NBA chairman, therefore urged Ambode to rethink his decision and immediately scrap the increment of the land use charge or risk being voted out of office as he is seeking a second tenure of his time in office.

In similar vein, the Manufacturers Association of Nigeria (MAN) voiced its concerns , saying stakeholders were not consulted and carried along before the decision to increase the charges was made adding that the increase would contribute to the folding up of many companies in Lagos.

MAN, through its President, Dr. Frank Jacobs noted that the state would be setting a bad precedent for other states if the law stands.

As the barrage of criticism greeted the edict,  on Tuesday, Governor Ambode  said he is ready to dialogue with the OPS on the Land Use Charge controversy. The governor spoke at a parley with the OPS, tagged: “Lagos Means Business” held at the Eko Hotels and Towers, Victoria Island, Lagos.

Ambode  informed  the gathering made up of business moguls and captains of industries that the LUC was supposed to be reviewed every five years, but lamented that the law had not been reviewed since 2002 when the law was set up, which spanned about 15 years.

“Now, the question is this, those who are having commercial properties, the rental income they were getting in 2002 as against the rental income they are getting in 2017, is it the same? The issue is this, the level of infrastructure that existed in 2002 as against what has happened in the last 15 years, are they the same? Did it not come at a cost? So, why is the market value of the property that you built with one million, 15 years after, you are selling at N20 million?

“Why do you think somebody who is a buyer will pay N20 million for it? Is it not because of the facilities around the property? So, we have to sacrifice; that is how it works everywhere. So, somebody comes and say we have increased by 400 per cent. The question is, the 400 per cent of what? You were paying N10,000 before, now we say you should pay N50,000 and you are calculating and turning statistics upside down by saying it is 400 per cent. Is it not still small?” Ambode asked while justifying the increase in LUC.

The governor clarified that pensioners, churches, mosques, NGOs and government institutions did not need to pay the LUC.

“But do you know the truth? Pensioners don’t need to pay. Owner-occupiers is just 0.67 per cent. For churches, mosques, NGOs, government institutions is free. So, who is the one that will take care of those that are free? If you are owner-occupier, you don’t need to pay. So, it’s the commercial part that people are complaining about.

“Why have we increased? We should have been doing this every five years but I am looking at it, if I must sustain the level of my vision, I have to give something back to people. I don’t have to come and meet you if we are borrowing money. But we are ready for dialogue, that is the sacrifice,” he said.

Ambode disclosed that N13.2 billion was generated as LUC in 2017, adding that N284 billion was raked in as taxes also in 2017.

But as more individuals and organizations continue to reject the upward review of taxes and rates like the land use charge, car registration fees and litigation fees in Lagos state, the Ikeja branch of NBA disclosed it would be embarking on a peaceful protest on Monday, March 12, 2018, to show its dissatisfaction.

The state had repealed 2001 Land Use Charge and replaced it with Land Use Charge 2018 to increase its internally generated revenue and continue to expand its capital base. Justifying the increase, Ambode government said would provide more resources to the state to provide social services and infrastructure to the benefits of the general public.

The edict, according to the governor is expected to serve as a source of increasing the state’s internally generated revenue (IGR) and to expand its tax base, being part of the N897bllion projected receipts to cover N1trillion 2018 budget.

Based on the new amendment, all Property and Land Based Rates and charges including; the Tenement rates law, Land rates Law, neighbourhood Improvement charge and all other similar property charges, would be harmonised and paid as a bill.

The new law ensures that assessments are based on ‘market’ or commercial value of land and improvements verified by professional evidence of the Estate Valuers appointed by the state.

But in a recent review conducted by Proshare, it was discovered that an annual Land Use Charge on the market value of a property, is an inequitable form of taxation, as the owner of the property will not be receiving the market value of the property on an annual basis.

The Land Use Charge payable on any property is calculated by multiplying the market value of the property by the applicable relief rate and annual charge rate using the prescribed formula.
For instance if property is solely occupied by the owner for residential purpose, the owner will be charged at a rate:-

LUC = 0.076% per annum x market value of the building

e.g if the property is valued at N9,000,000

N9,000,000 x 0.076% = N 6,840

If a property is occupied by the property owner and tenant(s) or third parties, the property will be charged at a rate:-

LUC = 0.256% per annum x market value of the property

e.g for a property valued at N20,000,000,

N20,000,000 x 0.256%= N51,200

For an investment property fully occupied by tenants or third party/parties for revenue generation, such a property will be charged at a rate :

LUC = 0.76% per annum x market value of the property

e.g If the property is worth N500,000,000

N500,000,000 x 0.76% = N3,800,000

For every vacant properties and open empty land in the state, such will be charged at :

LUC = 0.076% per annum x market value of the vacant property/open land.

For instance, a private homeowner in the suburb of Lagos ( e.g Abule Egba) who paid N3000 in 2015, during former Governor Babatunde Fashola’s administration, must be prepared to pay N7,000 per year ( if not more)

The law comes with stiff penalty as well. The sanction for non-compliance or defaulters based on the law has been increased to a maximum fine of Two Hundred and Fifty Thousand Naira (N250,000), from One Hundred Thousand Naira (=N=100,000) as provided in the 2001 Legislation.

The new legislation has extended the enforcement rights of the State to include a civil action against the defaulters to recover the accrued LUC. This right includes the power to jail defaulters for a period up to three (3) months, or to both the fine and the term of imprisonment.

In the new law, the State Government has given power to each Local Government Area (LGA) / Local Council Development Area(LCDA) in the state, to function in capacity as collecting authority for land use charge.

The LGA/ LCDA will under the LUC law be the only body empowered to levy and collect the land use charge within its specified jurisdiction. Note that the LUC is only payable on all properties except those exempted under Section 12 of the new Land Use Charge Law, 2018. Under the law, every dispute on payment and other related matters would be addressed through Alternative Dispute Resolution (ADR).

Meanwhile, if the ADR does not resolve the dispute within 45 working days of the first session or when the mediator declares a deadlock, the mediation shall be deemed inconclusive and all the parties involved shall be at liberty to resolve their dispute formally at the Special Tribunal established by the LUC law. Also shocking to most Lagosians is the inclusion o Apha Beta, a firm owned by former governor Bola Tinubu, as the sole agent that monitors and collects revenue for government. However, the House Assembly claims it was inserted in error.

Many interviewed by this newspaper have vowed to vote out Ambode’s APC if the law is not repealed.

Jimoh Asu,  a carpenter  who owns a property inherited from his mother in Lawason, has threatened to mobilize his friends and family members to vote out this administration , ‘’ as I speak, if the law sails through, I will mobilize against this administration in the next election.’’

His view was shared by Martins Uche,  a resident of Alimosho, who decried the ‘’ anti-people agenda of the Ambode administration.’

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