Lagos Land Use Charge Brouhaha

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In spite of the downward review of the new land use charge by Governor Akinwunmi Ambode, the law continues to generate controversy, writes Shola Oyeyipo

With the heated debates on the new Lagos Land Use Charge and the serious objection of residents to it, it showed sensitivity to the plight of the people and the fact that the Lagos State Governor, Akinwunmi Ambode is a listening leader, when he reviewed his stance and reconsidered the implications of the law, particularly in a pre-election year.

In 2001, the Lagos State government promulgated the Land Use Charge law, consolidating and replacing all the state and local government taxes payable on property in the state. This law was on January 28, 2018, repealed and replaced with the Land Use Charge Law 2018 by the Lagos State House of Assembly. Some of the highlights of the main changes in the law are the introduction of an LUC formula that ensures that assessments are based on market or commercial value of land and improvements.

The exemption available to cemeteries and burial grounds under the old law is restricted under the new law to public cemeteries, which means owners of private cemeteries will now be expected to pay LUC. Private libraries will be exempt under the law in addition to public libraries.

However, they must be certified to be non-profit making by the Commissioner of Finance. Also, the exemption for property owned by religious bodies has been limited to those used as a place of worship or for religious education. So, where any exempted property is leased out to private entities for revenue generation, the exemption ceases.

But the new one before its downward review is payable by occupiers holding long leases of 10 years and above, though it was not clear on whether such payment can be recovered from the property owner, the question would have been whether shorter term renewable leases would create obligation for the occupier.

But in line with international principles on taxation, which stipulates that illegality does not prevent a taxpayer from his fiscal obligations, the amended law defines occupier as lawful and unlawful occupant of a property.

Though there have been sustained protests against the new law, to the state government, the changes in the law were not fundamental changes in the LUC regime, they were only introduced to block the loopholes in the old law.

Explaining the concept, during a business forum penultimate Tuesday, Ambode said under the revised law, owner-occupiers are to pay 0.076 per cent of what is accruable to them, adding that pensioners, churches, mosques, non-governmental organisations and government institutions are exempted from payment.

According to him, if a house owner lives in his house with his family without a tenant, his annual LUC is 60 per cent of the value of the house multiply by 0.076. So, if the house is valued at N20 million, the fee is 0.076 per cent of (60 per cent of N20 million)

If the property is rented to tenants only and is worth N20 million, he pays 0.76 per cent of (60 per cent of N20 million) which is 0.76 per cent of N12 million and amounts to N91, 200.00. If the landlord lives with the tenant in the building with the same value, he pays 0.256 per cent of (60 per cent of N20 million) which is 0.256 per cent of N12 million, which amounts to N30,720.00

The governor noted that the law, made in 2001, was supposed to be reviewed every five years, but had not been reviewed for 15 years. He argued that since government’s huge investments in infrastructure development had helped increase the monetary values of the property, owners should pay the LUC to allow government do more.

He said: “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 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 naira, 15 years after, you are selling at N20million. Why do you think somebody who is a buyer will pay N20million for it? Is it not because of the facilities around the property? So, we have to sacrifice; that is how it works everywhere.”

His pleas and explanations were obviously not been bought by many Lagosians. Many of them were not ready to have the reviewed LUC forced down their throats and as such, are protesting at various levels.

The Nigerian Bar Association (NBA), National Conscience Party (NCP), Committee for the Defence of Human Rights (CDHR) and the Joint Action Committee (JAC) have already taken to the street since penultimate Tuesday to register their displeasure with the hike in the LUC, insisting on a review.

Marching from the Ikeja High Court to the Government House, Alausa, Ikeja, and dressed in red T-shirts with the inscription: “NBA rejects oppressive taxes in Lagos State,” they contended that the hike in charges would skyrocket the costs of goods and services.

Some of their other placards read: “Lagos is not only for the rich,” “We are not selling houses, why commercial valuation,” “Land Use Charge increment is wicked, satanic and oppressive.”

In the protest letter read to Ambode by the NBA Chairman, Ikeja Branch, Mr. Adesina Ogunlana, protesters argued that part of the implications of the taxes introduced by the administration was that it could lead to loss of jobs.
“We urge that you suspend the application of Land Use Charge for immediate review now, after extensive consultation with stakeholders. We respectively convey our branches deep opposition to the direction of your revenue generation drive in Lagos State by way of legislation of taxes and levies especially the land Use charge as captured in the land use charge law 2018,” Adeshina told Ambode.

Their antagonism to the law is on three premises: that the legislation was passed without proper consultations; that it lacks legality as it is considered a usurpation of the power of local government and consequently, an infringement of the constitution of the Federal Republic of Nigeria; and thirdly, that it would adversely impact on the economy of the people.

Adeshina said: “Despite the propaganda mathematics of your government, the truth is that the populace lacks the capacity to bear the tax burden now imposed. Lagos, ordinarily, is an expensive place to live. And only the elite/rich consider it a comfortable zone of existence.”

While the NBA, (NCP), (CDHR), (JAC) and other aggrieved Lagosians took their grievances to Ambode, a number of others are disgruntled and are lamenting in their individual homes. A check on the social media platforms like Twitters, Facebook, Instagram and others attests to the consensus that Lagosians are unhappy with the law.
The Manufacturers Association of Nigeria (MAN) and the Lagos Chamber of Commerce and Industry (LCCI), have also joined the list of organisations opposed to the review of the LUC.

It was not surprising therefore that the governor eventually bowed to the voice of reason and reviewed the new charges downward.

Certainly, the Ambode administration has won the admiration of many Lagosians and visitors with the giant strides it has achieved in infrastructure development in the last three years. It was the reason many were worried that throwing up the law in a pre-election season was counterproductive and that the governor’s political strategists must have to evaluate what consequences it is likely to have.

The Lagos State Chairman of the Peoples Democratic Party (PDP), Mr. Moshood Salvador, had maintained that the new charge was a justifiable reason to vote out the APC and replace the party with the PDP in the state in the 2019 elections. Like many others, to him, the new land use charge is exploitative, and an attempt to impoverish residents.

Though government’s earlier intention could be good, obviously, the timing was wrong. The people would hardly have accepted it and the opposition parties would easily have made a political capital out of it. Besides, it could rub off the shine on all other achievements of the administration and remain a major talking point till next year’s election. But the latest review of the charges, the 2019 battle shifts elsewhere, naturally.