April 10, 2018
Property taxation as a source of government revenue in Nigeria and other countries is not novel. In Nigeria, property taxes include Neighbourhood Improvement Charges, Tenement Rates and Ground Rent. In Lagos State, these taxes have been consolidated into the Land Use Charge (LUC).
The LUC was first introduced by the Land Use Charge Law of Lagos State (LUCL or the law) in 2001 which was recently replaced by a new LUCL that was enacted on 8 February 2018, with an upward review of the LUC rates. The LUC takes effect from the date of enactment. According to the State Government, the review became critical because of the huge infrastructure deficit in the State as well as the need for an increase in internally generated revenue.
The recent re-enactment of the LUCL has encountered stiff resistance from affected stakeholders. Apart from the increase in rates, other reasons for the resistance include the validity of the delegation of powers by the Local Government to the State and the discriminatory rates applied to owneroccupiers versus tenants of residential premises.
Some of the concerns raised are being considered as the Lagos State House of Assembly is working on a Bill to amend the LUCL (i.e. LUCL Amendment Bill) which was subjected to a Public Hearing on 27 March 2018.
Although the rates in the LUCL have now been reviewed, stakeholder dissatisfactions still linger, particularly in relation to the issue of accountability on the use of funds. In spite of the imposition of taxes, residents of Lagos State maintain that they still have to provide basic social infrastructure such as electricity, security and waste management for themselves.
This article seeks to evaluate some of the provisions of the new LUCL, the practice in other jurisdictions and the potential implications for taxpayers.