Nigeria News takes a look at the Lagos Land Use Charge Law and its implications.
Undoubtedly, the outrageous rate of the Land Use Charge (LUC) in Lagos State this year is to increase the Internally Generated Revenue for state and of course expand its tax base, being part of the N897bllion projected receipts to cover the 2018 budget of over one trillion naira.
Recall that the state government through the Assembly repealed its 2001 Land Use Charge Law, and replaced it with the new Land Use Charge Law, 2018, attributing it to inadequacies and lack of coordination.
Based on the new amendment, the law consolidates all Property and Land-Based Rates and charges including; the Tenement rates law, Land rates Law, neighbourhood Improvement charge and all other similar property charges.
Having conducted a critical perusal of the whole LUC law, and as laudable as it is, there are issues that needed clarification before every Lagosians will begin to feel the heat of the law which takes effect from Thursday, March 1, 2018.
What is obvious in the new law is the introduction of a land use charge formula that ensures that assessments are based on ‘market’ or commercial value of land and improvements as supported or verified by professional evidence of the Estate Valuers appointed by the States.
But in a review conducted by Proshare, it was discovered that an annual Land Use Charge rate on the Market Value of a Property is an inequitable form of Taxation as the owner of the property is not as a matter of fact, receiving the market value of the property on an annual basis.
The Land Use Charge payable on any property is calculated by multiplying the market value of the property by the applicable relief rate and annual charge rate using the prescribed formula.
For instance if property is solely occupied by the owner for residential purpose, the owner will be charged at a rate of LUC = 0.076% per annum x market value of the building.
If a property is occupied by the property owner and tenant(s) or third parties, the property will be charged at a rate of LUC = 0.256% per annum x market value of the property.
For an investment property fully occupied by tenants or third party/parties for revenue generation, such a property will be charged at a rate of LUC = 0.76% per annum x market value of the property.
For every vacant properties and open empty land in the state, such will be charged at LUC = 0.076% per annum x market value of the vacant property/open land.
However, the sanction for non-compliance or defaulters based on the law has been increased to a maximum fine of Two Hundred and Fifty Thousand Naira (N250,000), from One Hundred Thousand Naira (=N=100,000) as provided in the 2001 Legislation.
The new legislation has extended the enforcement rights of the State to include a civil action against the defaulters to recover the accrued LUC.
This right include the power to jail defaulters for a period up to three (3) months, or both the fine and the term of imprisonment.
And these are the collecting agents and enforcers.