Lagos govt gives breakdown of land use charge

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Amid the complaints about the new Lagos State Land Use Charge,
the Commissioner for Finance, Akinyemi Ashade, says an aggregated
tax that has combined three erstwhile separate taxes namely
tenement rate, ground rent and neighbourhood improvement levy into
one.

Ashade, who noted Tuesday in Lagos that Land Use Charge had been
trending for the wrong reasons recently, said that instead of
paying three different taxes, the tax payer pays just one
consolidated tax.

“Land Use Charge is not new in Lagos, neither has it been
arbitrarily introduced to the state. Rather, it emanated from a
long process of deliberation, consultation and engagement, all of
which typically precede law-making.

“Indeed, implementation of this particular tax was sequel to the
passage of the Land Use Charge Law of 2001 as promulgated by the
Lagos State House of Assembly.

“The law has therefore, been operational since 2001. Its
stipulations are also fairly simple. It essentially applies to
defined categories of properties which are in turn required to pay
taxes that vary in accordance with the categories.

“In calculating the Land Use Charge payable on a property, a
simple formula is applied: the estimated value of the property is
multiplied by relief rate and further multiplied by the appropriate
charge rate.

“While the estimated value of a property is self explanatory, I
will explain each of the other two terms in more detail,’’ the
commissioner said in a statement.

“The `charge rate’ is a relatively small percentage charge that
is applied to different categories of property depending on their
categorization. A property that is occupied by the owner for
instance, enjoys the lowest charge rate.

“A property that is used for industrial or manufacturing
activity is categorised as `industrial’ and is charged higher than
owner-occupied properties but considerably lower than `commercial’
properties.

“Commercial properties are those properties that are deemed to
be fully utilised for commercial activity — a bank branch for
instance. There are a few categories in-between.

“There is also the `relief rate’ which refers to a discount on
the calculated charge.’’

Ashade said the Land Use Charge Law of 2001 stipulated that
reviews of the charges payable be made on a five-year basis but for
some reason this did not happen.

He said that in 2017 for instance, properties were paying
charges based on rates that were last determined in 2001, adding
that clearly, after 16 years, those charges had largely become
obsolete.

The commissioner said that property valuation did not appear to
always follow a uniform standard and that there were often stark
variations in property valuation that were inequitable.

“Furthermore, property enumeration did not appear to be
proceeding as fast as it ought to and a considerable chunk of
properties was actually not paying this charge.

“These were some of the inefficiencies in the old Land Use
Charge regime that prompted the Lagos State House of Assembly to
repeal the old law and promulgate a new one.

“In the course of today’s trending debate on Land Use Charge,
some commentators have tried to create the impression that the
Lagos State Government arbitrarily, without engaging or consulting
different stakeholders, increased the Land Use Charge rates payable
in Lagos.

“This is not true. The process of the review of the old law and
promulgation of the new Land Use Charge Law by the Lagos State
House of Assembly was elaborate and painstaking,’’ he said.

Ashade said the draft legislation was rigorously interrogated
and debated at the Assembly not only at committee level but over
two separate hearings and that memoranda were invited from dozens
of stakeholder groups, including civil society groups, community
development associations, leadership of local government councils
and local council development areas.

He said the revised bill was eventually signed into law last
February by His Excellency, Governor Ambode, noting that the new
Land Use Charge law was different from the old law in some
respects.

“First, in the valuation of property, the new law prescribes
that this should be done using prevailing market rates. While I
admit that this has expectedly increased the charges that property
owners are expected to pay, I should add that it has helped to
standardise the Land Use Charge regime, eliminating the opacity
that was associated with the older law wherein calculation of
property value was sometimes based on the whims and disposition of
the assessor.’’

Ashade recalled that with the Land Use Charge regime not
undergoing any review for 16 years, as at 2017 before the repeal of
the old law, rates payable had become significantly obsolete.

“So when some people complain that their rates have gone up by
300 percent over last year’s rates, the truth is that the rates
have actually gone up for the first time since 2001.

“In adjusting the bill of a property owner from the N1,200 which
he paid annually between 2002 and 2017 to N5,000 annually for
instance, the new regime has simply tried to bring the charge
up-to-date and in line with present day realities, regardless of
the percentage increase.

“This is not to say, however, that the entire Land Use Charge
administration is working perfectly. It isn’t.

“Like all systems which employ human intermediaries, there are
occasional errors, especially where `Best of Judgement’ has been
employed in determining the scope and size of a property and the
exact use to which it is put.

“This typically happens where property enumerators are denied
access to these properties. I would therefore like to implore
Lagosians to kindly avail our enumerators of as much cooperation as
possible when they visit your properties.

“This is to help ensure that ultimately accurate variables are
used in determining the rates chargeable on each property,’’ he
said.

The commissioner said that this is one of the reasons why Ambode
made it clear at his engagement with the organised private sector
recently, that the government was open to dialogue.

“The Land Use Charge bills are on paper demand notices, not
etched in stone. Property owners who find their bills contestable
are encouraged to contact the Land Use Charge Office Help Desk at
Alausa or indeed any of our offices spread across Lagos.

“There are also provisions for mediation. If after all of this,
a citizen remains unsatisfied, he may proceed to the Appeal
Tribunal,’’ he said.

Ashade said that even though the law clearly stipulates that
upon receiving a demand notice, payment must be made within 14
days, failure of which different penalties of up to 200 percent of
the original bill would begin to apply, the reality is that the
state government is making key concessions in this area.

“We appreciate that the economic situation has impacted everyone
significantly and that the increases are steeper for some property
owners than others.

“Property owners who are unable to pay the full charge up front
can engage the Land Use Charge officials and jointly agree on a
staggered payment plan. So the argument that government expects
everyone to pay this charge in full upfront, regardless of your
economic circumstances, is not correct.’’

He said the new Land Use Charge regime also has several reliefs
or discounts that were designed to cushion the impact of the charge
on property owners, noting that Pensioners who were aged 70 and
above and who live in their own houses, were not expected to pay
Land Use Charge.

“Every property enjoys a general 40 per cent discount on the
calculated market value. Where a property owner goes ahead to pay
his bill promptly upon receiving the demand notice, he enjoys an
additional discount of 15 percent.

“A person living with disability and occupying his own property
enjoys a further discount of 5 percent,’’ the commissioner
said.

“So, I can confidently say that property owners need not be
alarmed at what they may have heard or read regarding this new Land
Use Charge regime.

“Land Use Charge does not seek to punish anyone. Where the
charge is considered outrageous for instance, we have provided
ample room for engagement with the Land Use Charge officials for
possible review.

“And of course, we recognise that the law has been made for us
and not vice versa.’’

Ashade said: “Very importantly, Land Use Charge is being
implemented in an asymmetric manner. What this means is that it
impacts considerably less on the less-wealthy or poor than the
wealthy.

“In our ongoing enumeration of properties in Lagos for instance,
we realise that the vast majority of properties across the state —
close to 75 percent, are valued below 10 million.

“A building that is valued at under N10 million is required to
pay annual land use charge of N5,000 (up from N1,200 which they
were expected to pay in the old regime).

“Simply put therefore, majority of properties in Lagos will be
required to pay N5,000 annual Land Use Charge which translates to
N417 every month.

“A building that is valued at N20 million for instance, only
pays N9,120 annually where it is occupied by its owner. If that
building is being used commercially, it pays N91,200 annually.

“If on the other hand it is partly occupied by the owner and
partly used for commercial activities, then the annual charge is
N30,720,’’ he explained.

He reminded Lagosians of the horrifying conditions of physical
and social infrastructure across the state, adding that from roads
to drainages, from power to bridges, from education to healthcare,
the story was the same.

Also, he noted that many of the residents were products of the
public school system, but today on account of severe under-funding
there was such a lack of confidence in the public school system
that everyone who could afford it, takes his child to a private
school.

“This need not be so. Is it decent to have Lagosians spend 7 to
8 hours in traffic everyday?

“But this is what we have been condemned to in the absence of a
functional mass transit system and the inadequacies of our road and
transportation infrastructure.

“Should we be relying on rickety commercial buses, otherwise
called “Danfo’’, to convey human beings in the 21st century?

“It is against the backdrop of decades of under-investment in
infrastructure in the face of our rapidly exploding population,
that we came to the realisation that we must embark on aggressive
infrastructure renewal across Lagos or brace up for total
infrastructure collapse.

“Internally generated revenue is our best hope for redressing
this humongous infrastructure deficit. Thankfully, the evidence of
effort in this regard stares us in the face everyday.

“From completed and ongoing construction works at Badagry, Epe,
Ikorodu, Ajah, Abule-Egba, Ojodu, Pen Cinema in Agege, Airport
Road, Oshodi, Oworoshonki and others, to the sundry road
infrastructure projects planned in this year’s budget, including
the BRT lane from Oshodi to Abule Egba and the 8km alternative road
to be constructed to link VGC with Freedom Road in Lekki Phase
One.

“From the enhanced security across the state and the major
streets which are all lit up at night to the planned investments in
education, healthcare and others, clearly the Ambode administration
is putting your taxes to good use.

“Our pledge is that even in the midst of our anxiety to work as
frenetically as possible to deliver the infrastructure that Lagos
requires, we will continue to engage Lagosians to ensure that the
there is understanding, appreciation and buy-in by our people and
that implementation of our IGR regime remains as humane as
possible,’’ Ashade said.