INTRODUCTION

Still pushing through its land reforms with the aim of increasing its internally generated revenue, the Lagos State House of Assembly, on Monday, the 29^th of January 2018, passed the Land Use Charge Law, 2018 (LUCL). The Lagos State Governor, Akinwunmi Ambode assented to the new LUCL on the 8^th of February 2018. The law is a consolidation of all property and land based rates and charges in the State.

Subsequent to the above, the Lagos State Government served demand notices for payment of 2018 annual Land Use Charge on property owners and affected occupiers. The Lagos State Government has equally extended the period of payment to 14^th April 2018 to enable affected persons to take the option of enjoying the discounts available for prompt payment.

The intrigues and controversies that have followed the LUCL have been subject matter of several debates in many fora.

I wrote an article on the LUCL titled: “UNDERSTANDING THE NEW LAND USE CHARGE OF LAGOS STATE” while away on a business tour to Europe and UK, and I expressed reservation about the timing of the LUCL and submitted at the tail that only time would enable me to fully assess the provisions of the LUCL. I have now calmly combed through the provisions of the law.

Permit me before dovetailing to the intrigues and controversies, to highlight some fundamental changes introduced by the new law when compared with the repealed law.

SALIENT PROVISIONS INTRODUCED BY THE NEW LUCL

1. SELF ASSESSMENT AND CERTAINTY

Unlike the repealed law, the new LUCL is explicit for self-assessment and is certain.  Under the old rate, the LUC rate was totally inaccurate and retrogressive. In the new law, the market value (addition of the land value and the building development value thereon)is now multiplied by the applicable relief and charge rates to arrive at the chargeable rate.

2. EXEMPTION CATEGORY in the new LUCL is widened. The following category of persons are exempted from payment of the annual charge, to wit:

• Property owned and occupied by a religious body and used exclusively as a place of worship or religious education;
• Public cemeteries and burial grounds as well as property used as a registered educational institution certified by the Commissioner of Finance (the Commissioner) to be non-profit making;
• Palaces of recognized traditional rulers in the State; a
• Any property specifically exempted by the Executive Governor by notice published in the State Official Gazette. Private cemeteries are no longer exempted.

There are however exceptions to the exemptions.

3. PROVISION OF ALTERNATIVE DISPUTE RESOLUTION (ADR) MECHANISM

Section 23(e) of the LUCL empowers the Tribunal to adopt ADR process in resolving dispute while Section 25 of the LUCL provides for Mediation process. A person dissatisfied after a mediation process may approach the Tribunal or resolve the issue through “any other lawful means”.

4. OFFENCES AND PENALTY PROVISIONS

Unlike the previous law, the new law broadened the offences and penalties. Penalty for non-compliance with the provisions of the law has been increased to a maximum fine of NGN 250,000 from the initial NGN 100,000

5. RIGHT OF ENFORCEMENT

The right of enforcement has been expanded by the new law. The Law has empowered the Attorney General of the State to approach the High Court to recover accrued charges or to obtain an order of distrain of property.

6. RELIEFS

Various reliefs have been made available to tax payers, including a general 40% relief for all property liable to LUC payment. 10% relief for properties above 25 years, 5% relief for property occupied by their owners for 12 years. 20% relief for non-revenue generating Federal and State property and 20% relief for non-profiting organisations. To enjoy these reliefs, applicants must make claims with evidence for approval.

7. SERVICES OF PROFESSIONALS

Despite the controversies, the inception of the LUCL has necessitated the creation of more jobs, apart from the 9 members (mostly professionals) of the Tribunal that would be appointed for different divisions of the state, the Government has already engaged professional services of over 100 registered estate surveyors and valuers who within the next six months will visit various property to get accurate data for valuation.

8. CONSOLIDATION OF PROPERTY LAWS

Due to the controversies that have trailed this new law, no one seem to appreciate that the LUCL consolidated property taxes and levies between the State and Local Governments tackling issue of multiplicity of taxes.

9. EXTENSION OF DEFINITION OF CHARGEABLE PERSONS

Persons liable to pay the land use charge have been extended to include occupiers holding long leases of 10 years and above.

10. 10. MORE POWERS TO LOCAL GOVERNMENT AREA

Each local government area in the State has been given powers under the new law to be a collecting authority for land use charge. Such local government will be the only body empowered to levy and collect the land use charge areas within its specified jurisdiction.

DIVERGENT VIEWS AND STANCE

For the past two weeks, this new law has generated so much argument, ranging from the Press Statement positions issued by various Associations of Landlords and residents in highbrow estates, the Organised Private Sector (OPS), Manufacturers Association of Nigeria (MAN) rejecting the new law, Nigerian Bar Association (NBA) 7days ultimatum, the heaping of blame by the Lagos State House of Assembly on the devil’s printer for the inclusion of Alpha-Beta in the new law. The consensus amongst them is that the hike by the Government which is insensitive and inhuman, would dovetail to the brunt of the increase been pushed to tenants and the attendant rise in goods and services, particularly, transportation, household commodities, necessaries and cost of services across bother.

On the other hand, the State Government has justified the hike that it was meant to bridge infrastructural deficit and that the repealed law had provided for review for every five years which was not done for 15 years now.  The Government argued that for commercial properties over these 15 years, the value of rent and leases paid by tenants to owners increased without any remittance of tax by owners to Government, that the assessment module is the best available presently and that the minimum rate payable by the LUCL was merely increased from NGN1,200 (from what it was in 2001) to NGN5,000.

The end to these controversies is far from being over.

IS THE NEW LAND USE CHARGE OF LAGOS STATE AN INVESTOR’S NIGHTMARE OR GOLDMINE?

The impact of the Land Use Charge on real estate investment in the State may only be ascertainable after the implementation of the LUCL has fully commenced. However, stakeholders in realty are of the view that there would be an increase in property value as investors would factor the land use charges ( in  order to defray the tax burden)  paid or payable into the market value of the property for the purposes of sale, leases or rent. This would add more value to the investors.

Although it is arguable whether the expected patronage would be as high as it was prior the enactment of the LUCL.  It is equally true that the new law may also be of concern to prospective investors as they would want to see if it creates investors’ goldmine or otherwise. However, it is beyond doubt that the real estate market in the State would not feel the negative impact of this new law.

MY POSITION OVER THE VEXED ISSUE OF INCREMENT

Whilst the blames, intrigues and controversies linger, my position is clearly stated below.

1. Firstly, I disagree with the argument from some quarters for the outright rejection of the LUCL. The law has laudable provisions which meets global standard but for the 200% to 500% hike. I also disagree with the Governor who appears to justify the unconscionable hike with reference that the repealed law had provided for review every five years which was not done and that for the commercial properties over these 15 years, the value of rent and leases has increased without the owner remitting any payment to Government.

With due respect, the above puerile argument is non-sequitur as it rather begs the question. It is not the fault of the citizens that the institutions saddled with the statutory responsibility of reviewing the law every five years failed to discharge its statutory duties; the law should not punish the citizens for institutional failures. It is equally out of place for the Government to base the hike on the ground that the owners in question had over years collected far above the rent from the time of the enactment of the repealed law till date. Such argument in my view beats common sense. The increase in rent in most of the cases was never 200% and 500% as to warrant this abysmal display of insensitivity.  The question which no one has answered till date is if the review was gradual every five years from the time of the repealed law bearing in mind economic indices, would the State Government have arrived by now to 200% and 500% increment?, the answer is NO!!!!

I equally fault the sanctimonious posture put up by the Government on being open to dialogue at this stage, as laughable and a face saving measure. I have always believed that proactive rather than damage control measures are required in government-citizens relationship. That call at this point for dialogue, with due respect, is a mockery to the collective psyche of Lagos residents and to say the least, a sheer display of insensitivity.

2. REDUCTION OF CHARGE UNDER THE LAW AND DELAY IN THE IMPLEMENTATION OF SAME TILL 3^RD QUARTER

My grouse from the onset has remained the timing of the law and I believe that had the State Government been more sensitive to the plight of the residents, it would have increased the land use charge, albeit, not more than 50% and would have delayed the implementation to the later part of the year.

The quest to generate revenue through tax should not be pursued without consideration to the economic hardship faced by the citizens in the nation. The Mega City status dream of the government though laudable can still be achieved with a human face rather than an unconscionable posture.

I suggest a reduction of the land use charge to 50% with the implementation to commence at end of the 3^rd quarter of the year, particularly, bearing in mind that there has been increase in Lekki tolls, deadline issued for compliance on building permit/approval, over 150% increase in car registration in the state and others yet to come.

3. VENTILATION OF GRIEVANCES THROUGH COURT ACTION –

Aggrieved parties should ventilate their grievances over the hike of the land use charge through due process of law by instituting a civil action against the relevant parties rather than resort to self-help or resort to inflammatory press statements. By the combined effect of Sections 10 and 11 of the High Court of Lagos State Law cap H3 Laws of Lagos State 2003, Sections 6(6)(b) and 272(1)of the Constitution of the Federal Republic of Nigeria 1999 (as amended), the Lagos State High Court is statutorily empowered  to entertain the subject matter pertaining, connecting and relating to the enactment of the law. By section 11(1) of the High Court Law, the State Assembly may by any subsequent law, confer jurisdiction on the State High Court, which is what the provisions of the LUCL have done.

However, it is pertinent to state here that where the narrow compass of complaint centers on an assessment based on the law considered to be erroneous or that the person charged was not chargeable under the law, the dispute can only be ventilated before the Assessment Appeal Tribunal established pursuant to the Law before approaching the State High Court where still dissatisfied.

In other words, the Lagos State High Court would be robbed of the jurisdiction to entertain a matter on the new LUCL where the subject matter questions the computation of a charge made pursuant to the law as opposed to the enactment of the law. It is trite that where a law provides a condition precedent to the exercise of jurisdiction by a court that procedure must be complied with. Refer to the case of AINA V. JINADU (1992)4 NWLR (PT. 233) 91 AT 109 PER NIKI TOBI JCA (as he then was) summed up the effect of the non-compliance with conditions precedent thus: “If a law requires the fulfillment of a pre-condition before a particular act or substantive or main act or action is to be done, non-fulfillment of the pre-condition will be prejudicial to the party in default.” Refer also to THE Supreme Court case of INAKOJU V ADELEKE (2007)4 NWLR (PT 1025) 423.

It is equally important to note that by Section 24(2) the time allowed for an appeal to the Tribunal is 30 days after the demand notice was served.

The LUCL provides that for an appeal to lie, notice must be given in the prescribed form, prescribed fees paid and according to Section 26(c) LUCL in case where it is a person aggrieved with assessment of person’s property, the affected person who is desirous of appealing must pay 25% of amount of assessment disputed and produce receipt.

I hold the view that the provision of Section 26(c) is an ouster of the jurisdiction of the High Court as it places a herculean task on a party dissatisfied with the decision of the Tribunal. The right to appeal must never be fettered and I submit that a provision of any law [such as Section 26(c) of LUCL] which purport to abrogate a right of appeal to a superior Court, is unlawful and capricious in addition to being inconsistent with the sacrosanct provisions of Sections 6(6)(a)and (b) of the Constitution and 10 and 11 of the State High Court law and as such liable to be struck down.

I urge the House of Assembly to quickly amend the law and remove the said provision.

4. ADOPTION OF MORE BETTER ASSSESSMENT MODULE

I would suggest that the Government revisit the assessment module, as it would appear that using the market value of a property to assess its charge on annual basis, is inequitable and akin to double taxation being that Capital Gains tax is paid at sale or purchase of the property.

This present module is questionable, contentious and inequitable. It is advised that the Government should go for a module that would not stifle commerce or scare investors from investment in the realty sector.

CONDEMNATION OF THREAT TO VIOLENCE

Without holding brief for the State Government, I totally reject the calls by some Associations of Landlords and Tenants in highbrow areas through their inflammatory press statement that suggests their readiness to resort to violence if the law is not reversed.

CONCLUSION

In the present circumstances, it is submitted that the Government must bear in mind that in the quest of embarking on its laudable vision of positioning the State as a commercial destination in Africa, it must consciously refuse to embark on policies that may scare the very investors who are being invited to invest in the untapped potentials of the realty sector. Only a reconsideration of its stance in the face of this intrigues and controversies, would justify its claim of responsibility to the already bleeding residents.

Stakeholders must equally bear in mind that the success of the friendly business environment of Lagos, is a collective function of all. It follows that comments and inflammatory press statements capable of hitting up the system and scaring investors must be discontinued while resort to the Tribunal or the Court as the case may be, would be a proper approach in the face of this impasse.

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