*The Land Use Charge Law Is Holistic And Fair To Everybody – LASG
Lukmon Akintola, Titilope Joseph
Lagos
The past couple of weeks witnessed some squirmishes between the Lagos State Government and building and property owners in the state.
The disagreement is an offshoot of an increment in the Lagos State Land Use Charge (LUC).
Home owners think that the amount to be paid is outrageous when on Monday, January 29th, the Lagos State House of Assembly passed a new law to provide for the consolidation of property and land based charges and make provisions for the levying and collection of land use charge in Lagos state; otherwise referred to as the Land Use Charge Law of Lagos State, 2018 (the “LUC Law”).
The LUC is payable annually by property and building owners in Lagos state. It is a consolidation of ground rent, tenement rate, and neighbourhood improvement levy.
The new law which is considered by many an unhealthy increment on the 2001 law was severally criticized when it was unveiled. It was described among other things as astronomical, while many without facts claim that there is a 400 per cent increment from the old rate.
To make matters worse, some false fees were posted online which showed that the rates per building is more than N500,000. This alone got more people even more irate. It is believed that the fees will be transferred from landlords to tenants.
Thus, the new rates was unanimously condemned by home owners, real estate stakeholders, the Ikeja branch of the Nigerian Bar Association (NBA), and even the ordinary masses who knew that eventually the increment would be transferred to them via their rent.
Among other things considered obnoxious by a lot of house and property owners includes the fact that ‘owners or occupiers of a lease’ are liable to pay LUC. The law also identifies both occupiers of leases of less than 10 years and occupiers of leases of 10 years or more as liable to pay charges. This is a notable change from the 2001 law which made this an owner liability.
At a Press Conference which held at the Bagauda Kaltho Press Centre, Alausa, Ikeja, Lagos on Wednesday, March 7, the Special Adviser to the Governor on Taxation and Revenue, Fola Lasisi; Commissioner for Finance, Akinyemi Ashade; his counterpart for Information & Strategy, Kehinde Bamigbetan and Special Adviser to the Governor on Information & Strategy, Idowu Ajanaku explained the misgivings surrounding the LUC, also reassuring Lagosians on easy assessment of charges.
Perhaps to further sink in the ideology behind the new rates and find a lasting solution to the problem, a Lagos state team further clarified issues at a stakeholders’ meeting organized by the Lagos Chamber of Commerce and Industry, (LCCI), on Thursday, March 9.
At the meeting which had building owners and stakeholders’ in the industry, attendees were enlightened on the new law, its benefits, the road to the state’s present position, how to compute the amount of charges payable on their respective properties by themselves and several other indices.
Speaking at the stakeholders’ forum organized by the LCCI, Ashade said the LUC law is aimed at entrenching a regime of self-assessment, which would allow property owners to make their own calculations and know their rate with the help of professional valuers.
In his words, “The LUC law institutes the regime of self-assessment. The intent of the reviewed law is for Lagosians to be able to compute the amount payable on their respective property by themselves.”
“You don’t have to wait for demand notices before your pay your charges, you can calculate it yourself, engage us, you can make your payments voluntarily. Do it yourself, let’s dialogue and let’s get the basis right,” he said.
While the method of determining the exact amount to be paid on varying properties is still considered hazy by a lot of people, the Commissioner further broke it down for easy digestion in three basic categories recognized by the law.
According to him, “If you are a landlord and you are the only one living in your house with your family (No tenant), your annual fee is 60% of the value of the house × 0.076%.”
“For instance, if your house is valued at N20million, your fee is 0.076% of (60% of N20m) = 0.076% x N12m = N9, 120.00 per annum”. “Secondly, If you are a landlord living with your tenant in the same building value of N20million, you will pay 0.256% of (60% of N20m) =0.256% × N12m= N30, 720.00 per annum.”
“Thirdly, If you rented out the house to tenants only and you don’t live there and the house is worth N20million, you will pay 0.76% of (60% of N20m) = 0.76% of N12m = N91, 200.00 per annum.”
While no specific amount has been pinned on a particular kind of building or property, one fact is that most of the calculations are based on percentage and the cost of the building wherever it is located.
Ashade, further explained the ideology, as he allayed any fear about the new LUC with his next statement. “The Law does not tax the market value of properties. It gives a general discount rate of 40% to all property owners in the state. The Land Use Charge Law is holistic and fair to everybody. It is quite discriminatory. It is not one cap, fit all. Market value of properties in Ikorodu and Ikoyi can never be calculated as the same,” he said.
If the first set of enlightenment and awareness campaign done had not achieved its aim, the stakeholders’ forum seemed to have yielded results.
Shadrack Bayowa, Managing Director, Hinges Construction and Properties Limited confirmed this when he revealed that the meeting had cleared the grey areas on the formulae used in assessing the LUC as well as whose shoulder lies the responsibility of valuation.
“I am more comfortable now with the new law as it is reasonable and progressive,” Bayowa said.
On his part, the President of the Lagos Chamber of Commerce and Industry, Babatunde Ruwase noted that one of the key tenets of democracy is inclusiveness, participation and dialogue. He commended the Lagos state government for being receptive to dialogue.
His words: “As business community, we appreciate what the state government has been doing, especially the investment in infrastructure and security. We are therefore willing and ready to pay our taxes. Indeed, over 90% of the current IGR of over N300bn generated in the state is coming from the private sector. We appreciate the need to even do more.”
However, amidst all these endorsement by both Bayowa and Ruwase, there are still those who are yet unconvinced about the explanations. Not even an endorsement by Lagos resident and popular comedian Gbenga Adeyinka has helped matters for them.
Larry E. Ettah, President of the Nigeria Employer Consultative Forum (NECA), holds a different opinion.
Ettah was quoted saying that “The recent amendment of the land use charge law is a classic case of insensitivity, alienation and gross disregard of the current state of wellbeing of both corporate entities and residents.”
Further, he said in reality the new law expected property owners in Lagos state to pay at the very minimum a monstrous, appalling and callous increase of over 200 per cent, and in some instances over 500 per cent in LUC.
“It is not as if the income of a property owner has gone up significantly to justify this outrageous law. More so, the real estate sector continues to wallow in deep recession with high vacancy rates,” he said.
To compound matters, he said, “There is a repugnant and odious penalty payment ranging between 125-200 per cent if payment is not made between April and August,” Ettah added.
The Manufacturers Association of Nigeria (MAN), also accused the government of not consulting stakeholders before the decision to increase the charges was made.
MAN, through its President, Frank Jacobs added that the increase would contribute to the folding up of many companies in Lagos and it will lead to increase in the price of locally made goods and finished commodities in the state thus killing local companies in the country.
This and many other issues are what have seen some protests against the Lagos state government and the new LUC. One of the most popular protests being that of Tuesday, March 13th tagged “We Say No To Hellish Taxes” The protest saw members of the Barrister Adesina Ogunlana-led Ikeja branch of the NBA walking in protest from Ikeja Roundabout to the Lagos State House of Assembly.
Some, however, have linked the protest to the Legal Adviser of the ruling All Progressive Congress (APC), Dr. Muiz Banire.
A statement signed by one Uzoma Uzoma and sent to Saturday Independent, alleged Banire of being behind the protest. The statement also alleged Banire of financing and bankrolling the protest.
The questionable statement titled; ‘Land Use Charge: ‘Lawyer Protesters’ sponsors unveiled’ partly read thus: “Strong indications have emerged that the recent protest by the ‘members’ of Ikeja branch of Nigerian Bar Association against the amended Land Use Charge law was politically motivated.”
“Investigations showed that the said protest was sponsored and bankrolled by the national legal adviser of APC, Dr Muiz Banire who spent millions to print t-shirts, posters, fliers e.t.c and oil the pockets of the executives of the NBA, Ikeja Branch.”
Uzoma based his allegation on some people in the know insisting that many known supporters of the embittered legal adviser were spotted in the recent march actively participating under the disguise of protesting against the LUC.
According to Uzoma’s statement, the agenda was to dent Amode’s image and popularity under the smokescreen of populist fight against the amended law of LUC by making Lagos ungovernable for him.
While the statement might have alleged Banire of being behind the protest of the Ikeja NBA, it actually lacks credibility and as such is quite questionable.
Another protest aimed at blocking the Third Mainland Bridge and other critical public infrastructure in Lagos might have been scuttled by the Nigeria Police who said any attempt to breach public peace will be met with stiff resistance.
A statement signed by the Public Relations Officer of the Lagos Police Command, SP Chike Oti, said no one had applied for any permit regarding a planned protest. He therefore advised organisers of any protest to follow the rule of law to ventilate whatever grievances with government.
Otti’s word “The attention of Lagos State Police Command has been drawn to the news making the rounds that a group of persons under the sponsorship of some mischief makers, and who are masquerading as civil rights activists, intends to block the Third Mainland Bridge and occupy some critical public infrastructures in Lagos to protest the increase in the Land Use Charge by the government of Lagos state.”
“The Command wishes to warn those concerned that any attempt by any individual or group of persons to cause a breach of the peace or infringe on the rights of others to pursue their daily aspirations, would be met with stiff resistance.”
Perhaps due to the protests and mudslinging strengthened by unverifiable information being circulated, the Lagos state government announced a 50 per cent reduction in the new LUC rates.
Has all these ruckus is going on, the Lagos State government seem to have heard the yearnings of Lagosians and have decided to do something about it.
The state has confirmed that a 50 per cent reduction had been placed on Commercial charges, 25 percent for Owner-Occupier and Manufacturing Concerns. Asides this, the state also gave tax credit for payment already made, cancellation of penalty for late payment for the year 2018, as earlier stipulated and also introduces installment payment plan, while some properties were given exemption. Other benefits include a total exemption for elder citizens above 70years old, and an additional 10% discount. For those living with any form of disability, there is also 10% discount while properties that are 25 years old and above will also enjoy another 10% discount.
Structures exempted from LUC includes properties such as properties used for public, religious and charitable activities, properties occupied and owned by pensioners of 60 years and above, public cemeteries and burial ground and all palaces of recognized Obas and Chiefs in the State. Interestingly, family compounds which enjoyed exemption in the 2001 law no longer enjoy exemption in the new law.
For a lot of people, the 50 per cent and sundry reductions including exemptions of some categories of structures is definitely a welcome development, as it was a win win for all involved. However, there are those who insist that the government had only scratched the surface of the problem.
Reacting to the development, Olurogba Orinmalade, Chairman (Lagos State Chapter) of The Nigeria Institution of Estate Surveyors and Valuers (NIESV), on Thursday, March 16, in Lagos hailed Governor Ambode’s gesture in slashing the new LUC for commercial properties by 50%. Orimalade described the Ambode-led government as a listening government and pledged his association’s support for the new law and all other progressive decisions of the government going forward.
In his words, “we are committed to working with the present Lagos State administration to make the new law succeed and we have already set up a technical committee to come up in ten days, with directions, recommendations and position of the institution on the law in order to collaborate with the government for a better society.”
Orimolade didn’t speak in isolation, as Arc. Ifeoma George, Vice President Nigeria Institute of Architects also supported the move by the government. According to her, “this is a listening government and we propose that stakeholders should continue to be carried along in all government dealings, going forward “.
However, other bodies including the NBA and NECA continue to frown despite the respite, saying that it is only a scratch on the surface of the problem.
The Director-General of the association, Segun Osinowo stated that the reduction was only based on the invoice value of the charges, which he said were still 600 per cent above the old rates on the average. He added that “The government has been shying away from constructive dialogue with stakeholders; the only way to resolve this issue is for the government to convene a dialogue. We want to stress the fact that where the government fails to embrace constructive dialogue to resolve this issue, the OPS might be compelled to go to court on this matter and seek the suspension of the law as they did in 2002. As far as we are concerned, this issue has not been resolved at all,” he stated.
On its part, the NBA has vowed to continue protesting. Not even an alleged unscheduled visit by operatives of the Department of State Security (DSS), during a meeting by the NBA has deterred them, as Ogunlana insisted that “the reduction was not acceptable as the government had not explained how it arrived at the figures on which the charges were based.”
With the Commissioner of finance, Ashade, emphasizing that the state government is opened to further discussions on how to solve the challenges plaguing infrastructural financing and investments in Lagos State, there is indeed hope for the masses, and less fear of rent increase.
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