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Lagos land use charge law 2018, a constitutional aberration

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Lagos State Governor, Mr. Akinwunmi Ambode

Before I begin this legal excursion, I crave the indulgence of my noble readers, to permit me, as a forerunner, to cast a bird’s eye view on the general principles upon which the doctrine of federalism rests.

Nigeria is a Federation of States and Federal Capital Territory (See Section 2 (2) of the Constitution) where a democratic system of Local Government Council is constitutionally guaranteed (see Section 7 (1) of the Constitution).

The Government of every State including Lagos State is mandated to ensure that the existence of the Local Government is preserved under a Law enacted by the House of Assembly of the State.

The said law is expected to provide for the establishment, structure, composition, finance and functions of the Local Government council (see Section 7 (1) of the Constitution).

The letter and spirit of the Lagos state Land Use Charge Law 2018 that was passed by the Lagos State House of Assembly on 19th January 2018 and assented to by the State Governor, Mr. Akinwunmi Ambode on February 8, 2018 run afoul of the above letter and intent of the Constitution of the Federal Republic of Nigeria 1999 as amended.

It is against this backdrop I shall formulate the following issues for determination: 1. Whether Sections 3, 5, 6, 7, 11, 14, 27 and 28 of the Land Use Charge Law 2018 are inconsistent with the provisions of Section 7(1) and (5), and Section 1(b) and (j) of the Fourth Schedule to the Constitution of the Federal Republic of Nigeria 1999 as amended and whether same are unconstitutional, null and void having regard to the provision of Section 1(3) of the Constitution.

Whether by the combined effect of the provisions of Section 4(2), (3), and (5) of the Constitution, the Lagos State Land Use Charge Law 2018 is inconsistent with the Capital Gain Tax Act and Land Use Act that were validly made by the National Assembly before the enactment of the Lagos State Land Use Charge 2018 and the Land Use Charge Law 2018 is according null and void.

Sections 3, 5, 6, 7, 11, 14, 27 and 28 of the Land Use Charge Law 2018 are inconsistent with the provisions of Section 7(1) and (5)

While Section 2 (2) of the law merely mentions that each Local Government Area in the state shall be the collecting authority and the only body empowered to levy and collect tenement rates for its area of jurisdiction.

Section 3 of the law suggests delegation of power of the local government area by a written agreement with respect to the assessment of privately owned houses or tenement for the purposes of levying and collecting rate.

Sections 5, 6, 7, 11, 14, 27 and 28 explain the intention of the delegation of power, which was suggested earlier under Section 3.

The provisions of Sections 5, 7, 11, 14, 27 and 28 do not pretend to recognize the Local Government Area (even though pretension was made under Section 2 (2)) as a collecting authority for tenement rates as all the necessary elements in exercising the functions of the Local Government has been surreptitiously taken away by the Commissioner of Finance.

Under Section 5 of the law, the power to identify or assess property for the purpose of levying tenement rates is solely on the Commissioner. The power to appoint consultants is conferred on the Commissioner under Section 6.

Although Section 7 appears to be silent on who oversees the Lagos State Valuation Office, it is safe to conclude that the Commissioner would preserve the existence of the Lagos State Valuation Office.

The payment shall be made into designated banks controlled and managed by the Commissioner (see Sections 11, 14 and 27 of the Law). The Attorney General of the State upon the recommendations of the Commissioner shall be solely responsible in making recovery of the Land Use Charge.

It is crystal clear that the provision of Section 2 (2) of the law has now been by-passed or completely disregarded by the subsequent provisions of Sections 5, 6, 7, 11, 14, 27, and 28 of the law which now recognizes the Commissioner of Finance as the sole collecting authority of the tenement rate which is a direct attack and assault on the functions and powers of the Local Government under the provision of Section 7 (5) of the Constitution of the Federal Republic of Nigeria 1999 as amended.

This result may have flowed from the application of the rule for the interpretation of statutes, which was noted by Maxwell on the Interpretation of Statutes, 12th ed. P. 187 as follows: “If two sections of the same statute are repugnant, the known rule is that the last must prevail”

Section 7 (5) of the Constitution provides as follows: “(5) The functions to be conferred by Law upon local government council shall include those set out in the Fourth Schedule to this Constitution.”

Paragraph 1(b) and (j) of the Fourth Schedule to the Constitution provides as follows: “1. The main functions of a local government council are as follows: (b) collection of rates… (j) assessment of privately owned houses or tenements for the purpose of levying such rates as may be prescribed by the House of Assembly of a State; and…”

The provisions of the Lagos State Land Use Charge Law are unconstitutional, null and void having regard to the provision of Section 1(3) of the Constitution.

The above provision of the Constitution only recognizes part of the functions of the Local Government Council as collection of rates including tenement rates and the House of Assembly of State is expected by law to prescribe the mode of assessing or levying the tenement rates without removing from or adding to the functions of the Local Government Council.

The extent of the power of the House of Assembly in enacting a law for the Local Government Council is clearly defined under Section 7 (1) of the Constitution i.e. a law by the House of Assembly for the purpose of preserving the existence, structure, finance, composition, establishment of the Local Government Council.

The Lagos State Land Use Charge Law has clearly snuffed out the life of the Local Government Councils in Lagos State and the said provisions are, therefore, null and void by virtue of the provision of Section 1 (3) of the Constitution.

The Supreme Court, per Niki Tobi (as he then was) in NIGERCARE DEVELOPMENT COMPANY LTD. V. ADAMAWA STATE WATER BOARD & ORS.(2008) LPELR-1997(SC) defined the word inconsistent as used under Section 1(3) of the Constitution to mean ‘ideas or opinions which are not in agreement with each other or with something else.

It also means mutually repugnant or contradictory, contrary, the one to the other, so that both cannot stand, but the acceptance or establishment of the one implies the abrogation or abandonment of the other as, in speaking the repeal of statute, which is inconsistent with the Constitution. See Black’s Law Dictionary Sixth edition, page 766.

In the context of Section 1 (3) of the Constitution, it simply means the statute speaking quite a different language from the Constitution.’

The Supreme Court in Knight Frank & Rutley (Nig.) v. A.-G., Kano State (1998) 7 NWLR (Pt.556) 1 interpreted the provision of Section 7 (5) and paragraph 1(b) and (j) of the Fourth Schedule to the Constitution and had this to say: “It is clear from the provisions of paragraph 1(b) and (j) of the Fourth Schedule read together with the provisions of Section 7 subsection (5) of the Constitution that the intendment of the Constitution is that only Local Government Councils have the power to assess and impose rates on privately owned property.”

The Supreme Court stated further that: “The House of Assembly of a State may by law prescribe the type of rates to be levied on such privately owned houses or tenements.

The assessment and collection of such rates are exclusively the function of the local government council as guaranteed by the Constitution and not by the State Legislature. Paragraph 1m of the Fourth Schedule to the Constitution is clear and unambiguous.

The State Legislature or the Military Administrator during the present dispensation has no business in the assessment and collection of rates in respect of the premises stated in the said schedule.

It will amount to a usurpation of the power of the Local Government Council for the State Government to carry out such exercise or engage any person or authority to do so on its behalf.”

In Knight Frank & Rutley (Nig) v. A.G. Kano State (supra), the Kano State Commissioner of Finance entered into an agreement with the Appellant to prepare valuation list of all rateable hereditaments for the collection of property rates in the area of Kano State.

The Supreme Court held that the agreement was illegal and void as the exercise of power by the Commissioner of Finance contravened the functions and powers of the Local Government Council under the provision of Section 7(5) and paragraph 1(b) and (j) of the Fourth Schedule to the Constitution.

By virtue of Section 4(2), (3), (5) of the Constitution, the Lagos State Land Use Charge Law 2018 is inconsistent with the Capital Gain Tax Act and Land Use Act that were validly made by the National Assembly before the enactment of the Lagos State Land Use Charge 2018 and the Land Use Charge Law 2018 is accordingly null and void.

It is my humble submission that having regard to the provisions of Section 4(2), (3), (5) and 7 of the Constitution, the Lagos State Land Use Charge Law 2018 is inconsistent with the Capital Gain Tax Act and the Land Use Act which were previously enacted by the National Assembly before the enactment of the Land Use Charge Law 2018 and same is accordingly unconstitutional, null and void and of no effect.

Section 4 (2) of the Constitution clearly empowers the National Assembly to make laws for the peace, order and good government of the Federation or any part of the Federation in respect of any matter included in the Exclusive Legislative List set out in Part 1 of the Second Schedule to the Constitution.

One of the matters listed under the Part 1 of the Second Schedule to the Constitution is ‘taxation of incomes, profits and capital gains’.

Also, Section 4 (3) of the Constitution is instructive on the point that the power of the National Assembly to make laws on Exclusive Legislative List including matter of taxation of incomes, profits and capital gains shall be strictly to the exclusion of the Houses of Assembly of States including Lagos State House of Assembly.

In the same vein, it is crystal clear from the provision of Section 4(5) of the Constitution that where there is any law made by the Houses of Assembly of States including Lagos State House of Assembly is inconsistent with any law validly made by the National Assembly, the law made by the National Assembly shall prevail and the other law shall be void to the extent of its inconsistency.
Lagos State Land Use Law 2018 inconsistent with the Capital Gain Tax Act.

Community consideration and holistic appraisal of the Lagos State Land Use Charge Law 2018 will reveal that the purpose of the law is to raise tax on the increase in the money value of land and buildings in Lagos State.

This above reasoning is not farfetched considering the fact that in computing the amount of tax payable under the Land Use Charge Law of Lagos State 2018, the formula used is the current market value of the land and buildings concerned.

Hence, the law enacted by the Lagos State Government involves an element of tax on capital gain.

This would not have been so if the basis for computation had been the cost of the land and buildings at the time of acquisition by the owner.

Tax on capital gain has been clearly provided for under the Capital Gain Tax Act Cap C1 Laws of the Federation 2004 and it does not require an additional law by the Houses of Assembly of States in this instant Lagos State House of Assembly.

It is for the above reasons I safely conclude that the Lagos State Land Use Law 2018 is inconsistent with the Capital Gain Tax Act, which is a law validly made by the National Assembly and it is therefore void.

Lagos State Land Use Law 2018 inconsistent with the Land Use Act

Aside the argument so far advanced on the unconstitutionality of the Land Use Charge Law, the said law is also unconstitutional and invalid as a result of certain provisions of the Land Use Act Cap L5 Laws of the Federation 2004.

Section 14 of the Land Use Act provides inter alia as follows: “… the occupier shall have exclusive rights to the land the subject of the statutory right of occupancy against persons other than the Governor.”

Also, Section 51 of the Land Use Act defines an ‘occupier’ as follows: “… any person lawfully occupying land under customary law and a person using or occupying land in accordance with customary law and includes the sub-lessee or sub-lessee of a holder.”

From the above provision, it is inconsistent with the occupier’s exclusive rights to land in Lagos State to impose a charge or encumbrance on the said land to secure the payment of a tax imposed by that state law.

It is equally inconsistent with the occupiers’ rights to make the land over which they have exclusive rights liable to enforcement pursuant to Section 31(2) of the Land Use Charge.

Furthermore, by virtue of Section 315 (5) (d) Constitution, the Land Use Act shall not be altered or modified except in accordance with the provision of Section 9 (2) of the Constitution which provides for mode of altering the provisions of the Constitution i.e. the Land Use Act to be validly altered must comply with laid procedure for alteration or amendment of the Constitution.

The imposition by the Lagos State Government of a charge or encumbrance on the exclusive rights of the occupiers in Lagos State is a direct attempt at altering or amending the Land Use Act without complying with the provision of Section 9 (2) of the Constitution and the Land Use Charge Law 2018 is therefore unconstitutional, null and void.

CONCLUSION

The Lagos State Government clearly committed a foux pas in enacting a sensitive legislation as Land Use Charge Law which affects practically all residents of the state without proper and constructive engagement of the civil societies, major stakeholders and enlightenment on the law before passing it into law if it had done that errors committed could have been avoided.

The panel-beating of the law by the Lagos State Government in engaging stakeholders for possible amendment of the law appears to be ‘medicine after death’.

In the same vein, the entire gamut of the provisions of the law will still remain null and void (as ‘you cannot put something on nothing’. See Macfoy V. UAC (1962) AC 158 per Lord Denning) irrespective of any watertight amendment or alteration that may be attempted on the law, having regard to the above arguments.


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