Building Professionals Demand Re-examination of Lagos LUC  

A committee of professionals in the building and construction sector of the nation’s economy has said that the 50 per cent reduction in the new Land Use Charge for commercial property announced recently by the Lagos state government was inadequate and did not address the problem.

The committee, set up by the Building Collapse Prevention Guild (BCPG), had reputable members from the seven built environment professional bodies.

The committee, headed by the National Financial Secretary of BCPG, and immediate past Chairman of the Nigerian Institution of Estate Surveyors and Valuers NIESV, Lagos State Chapter, Samuel Offiong Ukpong, stated that the foundation of the assessment which is the crux of the matter has not been addressed by the state government, adding that the major question is, who did those valuations to arrive at those capital values?

The report states that “the example of N20 million adopted by the government does not show how it was arrived at, where it situates and what constituted commercial or owner occupied,” arguing that “assuming part of the property is rented as residential or commercial, where do people stand?”

They said the entire exercise is faulty and that the government should admit and do a rethink, stating that “the consolidation of the three forms of land taxes into one payment for ease of administration is good; Lagos state has about 300 heads of taxes, and this is a huge burden on the citizenry.”

According to the report, “professional valuers did not carry out any valuation to determine the Market Values before the issuance of demand notices, insisting that the publication of the rate of relief as enshrined in the law was not done in any national newspaper before the demand notices.”

They said, “The Assessment Appeal Tribunal had not been set up before demand notices thereby hampering appeal within the 30 days stipulated by the law, pointing out that the tax formula though a known one, should be based on the annual equivalent and not on capital value.

“There are alternative methods of valuation for tax purposes especially the annual income approach. Taxes should be based on income and not on the capital values derived from market value. There are other forms of property taxes at the disposal of the asset such as capital gain tax, capital transfer tax, withholding tax, consent fees and others.

“The neighbourhood law stipulated that levies should not be higher than ground rent and the intention was affordability. The core professional Ministry, Bureau or Department in the government saddled with land matters/valuation should head the Land Use Charge Administration rather than the Commissioner for Finance.”