Following public outcry over provisions of the 2018 Land Use Charge (LUC) in Lagos State, Governor Akinwunmi Ambode last week announced a downward review of the charges. While it is good that the government would respond to public opinion and make concessions, there are also those who argue that the state needs to address several other concerns which may necessitate repealing the law in its entirety. Incidentally, I foresaw this problem about 17 years ago but it would appear that the current administration in the state has refused to learn any lessons from the past.
In December 2001 when the law was first promulgated, my column on this page was titled “Tinubu Can’t Be Serious”. Then, like now, it was as if the people don’t matter, even though Governor Bola Tinubu eventually had to listen to voices of reason before reaching a compromise with critical stakeholders. I am reproducing that particular piece to remind Ambode of how the problem started, before I draw my conclusion.
About four weeks ago, three Lagos State Commissioners (Rauf Aregbesola, Oladele Alake and Olawale Edun) visited our Apapa office and they wasted no time before telling us their mission. First, the Information and Strategy Commissioner, Alake, went into a laborious explanation on how Lagos has become a mega city and the problems associated with over population. He was supported by his Works counterpart, Aregbesola before Edun, the Finance Commissioner, brought in one ‘Oyinbo’ consultant to give us a lecture with a projector.
However, even before they told us where they were headed, I knew what brought them: Lagos State wanted to introduce some levies again and they needed media support. Government officials are always very zealous when it comes to money matter so at the end, the long and short of their visit was a planned introduction of charges on property in Lagos. They said the bill had already been passed into law by the State House of Assembly in which case all they came to do was to merely inform us.
Since none of the editors owns any property in Lagos, the visiting commissioners knew we would not be much problem. Even at that, many of us were actually receptive to the idea because members of the elite in Nigeria do not like paying taxes. So if the property owner class would be taxed to develop the state, it was not a bad move. The snag though is that in enacting such a law, the people should be adequately informed while the levies should be reasonable. Unfortunately, that is not what has transpired on this matter.
In a letter dated 10th September 2001, addressed to many landlords in Victoria Island, outrageous amounts of money were charged. A copy of one of such letters sent to a property owner on Oyin Jolayemi Street (who shared it with me in confidence) reads: “Notice is hereby given in respect of the land and buildings situated at the following location… The land and buildings have been assessed in accordance with the Land Use Charges Law, 2001 and have been found to have an assessed value as noted below: N180, 981, 000. 00. The Land and buildings are being used for commercial purposes and are therefore subject to Land Use Charges of 2.50% of the assessed value. The following Land Use Charges are payable: Land Use Charges set for the year 2001—N4, 524, 525.00.”
As if the letter was written by one of those lawyers who worked under the late General Sani Abacha, it continued: “The Lagos State Land Use Charges Law, 2001 provides for penalties for delayed payment and these are fully enforceable (and will be enforced) under the law. The amount, including the penalties which will be payable in the event of payment delayed after the 15-day grace period following the due date above, is as follows: For payment between Oct. 25, 2001 and Nov. 9, 2001—N5, 655, 656. 25; For payment made between Nov. 10, 2001 and Dec 2001—N6, 786, 787.50; For payment made between Dec 10, 2001 and Jan. 8, 2002—N9, 049, 050.00.”
Now the clincher: “If payment in accordance with the foregoing is not received on or before Jan., 8, 2002, the property to which this notice relates shall be liable to receivership by the State or its appointed agent until all outstanding taxes, payments, penalties and administrative charges are paid under the law.”
While I commend Tinubu’s efforts in developing Lagos and one cannot fault his revenue generation drive, his latest decision makes no sense and he cannot win the support of the people on a patently flawed process. One, a ‘law’ that was just passed is now given retroactive powers as if we are under military regime. Two, even if a property is worth N181 million must a landlord pay N4.5 million in a year as charges when the rent on the property might just be only slightly above that? Three, is it sensible to base an annual assessment for the purpose of administering charges on the value rather than on the rent accruable on a property? Four, do the property owners not deserve to be consulted before this arbitrary law was enacted?
Even as a lay man in economic matters, I am fully aware that one of the cardinal principles of taxation is that it must be reasonable. Why is it that the authorities in Lagos want residents to pay some ridiculous annual charges that would further hike the already high rent on property in the state? Besides, when the Lagos State Government started this property assessment campaign, what they told us at the time was that it would only be for planning and not for taxes; does it mean they were deceiving the people?
It would appear that a common feature of governance in Lagos now is arbitrary regime of levies—from the council to the state. But Edun and his men in the Lagos State Finance Ministry had better put on their thinking caps and come up with a more realistic formula on their new ‘law’ otherwise Lagos property owners might be compelled to simply ignore them. Then we will see how many houses they will put under receivership in a democratic government. Even Abacha, as brutal as he was, would find it impossible implementing the ‘law’ Tinubu now wants to foist on Lagos property owners…