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After the Akinwunmi Ambode-led Lagos state government, on Thursday announced a major reduction in the Land Use Charge (LUC) rates, as well as, waived the penalty for late payments across board, fresh concerns are now being raised over exorbitant valuations of commercial and residential properties.
These LUC was subject of extensive deliberations at the meeting of the state executive council on Wednesday, March 14th, 2018 chaired by Ambode, which resolved as follows: Commercial property owners, who are undoubtedly the stakeholders most impacted by the amended law will be granted a 50 percent discount. This means a commercial property valued at N20 million which was earlier billed N91, 200 will now pay N45, 600 per annum.
Property occupied by owner and third party and property used for industrial and manufacturing purposes will now enjoy 25 percent discount. This means that a N20 million property expected to pay N30, 720 will now pay N23, 040 per annum
Owner-occupied property will enjoy 15percent discount. For a N20 million property, this used to be N9, 120. Now, it is N7, 752 per annum.
“It is a good first step as it appears to be a climb-down by the State Government,” Larry Ettah, the President of Nigeria Employers’ Consultative Association (NECA) , an umbrella organisation for all employers in Lagos, told BusinessDay on phone.
“We believe the Lagos State house of assembly will have to take some responsibility for this trouble. Although it was an executive Bill, when it came time for public hearing on the bill, we were given only 5 minutes, and it seemed to us then that they had taken the decision to go ahead. We will give a fuller statement after we have taken time to study the new rates.”
However, despite this reversal in the charge, Lagosians and several stakeholders are not satisfied with the valuations made by the government stating that a clear template should be spelt out regarding the way these properties are being valued.
Property owners have also raised eye brows, saying there is high vacancy ratio in Victoria Island, Ikoyi and Lekki, and as such, funds are unavailable to pay for the charges being slammed on their properties.
“The Land Use Charge (LUC) rate cut is a move in the right direction; although proper consultation should have taken place before the increase but the valuation is still arbitrary,” Bismarck Rewane, Managing Director at Lagos-based Financial Derivatives Company said.
“Considering the national income grew by 0.8 percent in 2017, inflation is still up at 14.33 percent-meaning that people’s income had gone down by that amount. Therefore, to increase taxes at this time will be a burden on the people,” Rewane said.
A phone call immediately placed to the commissioner of Finance Lagos State Akinyemi Ashade, was responded to via a text stating that the Lagos state government is working to see that issues regarding valuations are properly addressed.
“The state has complaints resolution mechanism to address individual complaints and rate payers are encouraged to use the help desk and meditation mechanism to address valuation issues,” Ashade said.
Furthermore, “we also encourage self-assessment by property owners and reconciliation with government records.”
The reviewed rates applicable in the Land use charge 2018, which drew protests from stakeholders, were as follows: owner-occupied residential property, 0.076 percent, owner occupier plus commercial property, 0.256 percent; industrial/commercial property, 0.76 percent per annum.
Ashade alongside over 15 members of the state executive council said the state has also resolved to waive all penalties in respect of late payment of the land use charge, in 2018, and allows paying by instalment.
The new waivers announced, according to Ashade, will not affect reliefs originally inherent in the law such as the automatic 40 percent which applies across board, and all others which the tax payers are expected to apply for, with proofs, on basis of age payer and property, disability, pensioners and timely payment, among others.
Dolapo Ashiru, CEO at Mega Financial capital said “to me I think the problem is not in the government valuing the property, but a template that will be clear by all parties involved, on how the valuation will be done.”
Adeniji Kazeem, the attorney general and commissioner for justice Lagos State said these new resolutions, will be forwarded to the state House of Assembly who will commence a legislative process to enshrine them in the law without suspending the implementation of the LUC.
In the line with these, the House of Assembly will be expected to pass the following resolutions: The regulation for review of applicable rates and regime of reliefs on categories of properties pursuant to LUC law; and the regulation for a framework for self-assessment.
According to the officials, government expects that stakeholders will participate in the legislative proceedings that will give the new rates legal effect just as it assured that taxes paid will be made to work for the people.
“In line with this administration’s tradition of inclusive governance and civic engagement, and as a government that is committed to the welfare of its citizens and understands the importance of continuously engaging the populace, we undertook extensive dialogue with various stakeholders on the Land Use Charge (“LUC”) revised law and its implementation,” Kazeem said.
“Consequently, we received a wide range of responses from our dialogue with various stakeholders on the amended LUC Law 2018. The stakeholders included the Organised Private Sector (OPS), Nigeria Bar Association (NBA), Real estate investors & developers, Landlord & Resident Associations, Community Development Associations, Civil Society Organisations, Lagos Chamber of Commerce and Industries (LCCI), Nigeria Institute of Estate Surveyors and property valuers and several other professional groups.”
JOSHUA BASSEY, ENDURANCE OKAFOR & MICHEAL ANI
