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Academics caution on property tax, urge objective assessment


Professor of Tax and Fiscal Matters, University of Lagos (UNILAG), Abiola Sanni (left); Deputy Vice Chancellor, UNILAG, Management Services, Prof. Emukufia Oghojafor; Head, Department of Estate Management, Prof Modupe Omirin and Dean, Faculty of Environmental Sciences, Prof.Michael Adebamowo during the one-day Roundtable on Lagos State Land Use Charge Law

With the poor recovery levels of property tax in the Lagos metropolis, university teachers have proposed that the state government adopt greater tax equity and efficiency.

They argued that the government should exercise caution and avoid hasty actions, which could result into errors that can literally stump the real estate sector resulting into a situation akin to killing the goose that lays the golden egg.

Making their submission at a one-day round table on the Lagos State Land Use Charge Law, 2018: Towards Sustainable Administration and Best Practice organised by the Department of Estate Management, University of Lagos, the dons said that the State Government is in a dilemma as revenue from Land Use charges will be boosted better by increasing the tax base.

In a joint address, the Head, Department of Estate Management and Dean, Faculty of Environmental Sciences, Prof. Modupe Omirin  and Prof. Mike Adebamowo respectively, pointed out that “rather than over burdening existing property owners and occupiers this can be achieved by creating more hereditaments through land use intensification or densification particularly in prime areas where land is presently underused.”

While offering technical assistance to the government to boost revenue generation for the sustained development and provision / maintenance of critical infrastructure for a strong fiscal base and resilient economy, they called for the reconsideration of the key issues underlying the law to ensure sustainable administration such as acceptability, enforceability, affordability, legality or legitimacy and transparency.

Setting the tune for the discussion, the duo commended the Lagos State Government for being at the forefront of property tax reform in Nigeria and recent efforts to review some aspects of the LUC in response to the reactions of stakeholders across board.

“Since the promulgation of the Land Use Charge Law of 2001 several other states of the federation have attempted to replicate it in their areas of jurisdiction.“We commend also, the State Government’s sensitivity to public opinion and efforts to reduce the chargeable rates although prior consultation and adoption of advocacy planning before the new law was passed could have helped avoid some of the problems leading to further amendments at such an early stage,” they said.

According to the lecturers, the forum was planned as part of their contributions to help forge a better way forward for the implementation of a more appropriately reviewed land use charge law. “We believe the best approach to a clear reform in the property tax system requires extensive consultation and an objective assessment of the various issues at stake.

“We therefore do not wish to be embroiled in emotive arguments that swamp factual information and lead to further confusion; although we must acknowledge that property owners and investors are not altogether unjustified in their protests against the astronomical rise in their tax bill in some instances,” they said.

They said: “A good property tax system and the Land Use charge for that matter must be seen to comply with the principles of good governance which also include inclusiveness, subsidiarity, accountability and efficiency. It is the seeming absence of evidence of some of these characteristics that has engendered so much of the negative reactions.”

The gray areas, pointed out include; ONE: Adoption of capital values as basis of assessment of all properties. “Unlike annual rental values which are receivable by property owners and evidence of which is easier to obtain through market surveys and records of actual collection, capital values are not realizable until a sale occurs.

TWO: The 40 per cent general relief on all assessed capital values does not in any way provide any relief for persons not in beneficial occupation of their properties.
THREE: Erroneous Depreciation Rates; “This is an anomaly given the fact that, under normal circumstances, older buildings would, on account of their age be subject to more wear and tear. Although it is a truism that age may not reflect the true state of obsolescence of a property, the recommended rates may be misleading.”

“Age should not be the sole determinant of depreciation. Rather, it should be determined by a realistic assessment of the state of the property and the level of maintenance as a property can be new but functionally obsolescent or poorly maintained or, on the other hand very old but in excellent condition.”

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