Categories: Editorial

The Lagos Land Use Charge controversy

The public outcry that greeted the Lagos State government new Land Use Charge (LUC) is quite understandable. The increase, which was considered astronomical, came at a wrong time. Although the increase is believed to shore up revenue for infrastructural development of the state, the matter can still be revisited.

The drive by successive administrations to give Lagos a befitting status of a megacity is well known but it must be done gradually. While announcing a downward review of the charge, the state Commissioner for Finance, Mr. Akinyemi Ashade, explained that the new charge was imposed because of the state’s desire “to build world-class infrastructure and improve the well-being of its citizens.”

The new charge, said to be as high as 400 per cent in some cases, affects all property owners across the state. Properties used for wholly commercial purposes attracted the highest percentage increase, while efforts were made to make concessions to the aged, pensioners and physically-challenged persons that own property in the state.

The government was highly criticised for introducing the high land charge at this period when the economy is struggling.  In fact, the new Land Use Charge Law 2018 would most probably go down as the most controversial law the Lagos State government has enacted in recent time.

Various interest groups, including the Ikeja Branch of the Nigerian Bar Association (NBA) and the Lagos Chapter of the Manufacturers Association of Nigeria (MAN) embarked on mass protests against the new law. This resulted in a capitulation on the part of the state government but which many stakeholders still believe is not far enough. They want a return to the old regime of Land Use Charge.

In the bid to appease agitated Lagosians, the state government announced a downward review of the Land Use Charge by 50 per cent on commercial property owners. The reduction came on the heels of public outcry against the new charge and government’s intervention on the matter after a prolonged session at the State Executive Council presided over by the state governor, Akinwunmi Ambode. In the same vein, properties occupied by owners and third parties in the same premises but used for commercial and manufacturing purposes would enjoy a 25 per cent discount while owner-occupier properties would get a 15 per cent discount on the earlier announced rates.

Government also explained that a commercial property valued at N20 million, which was earlier meant to pay N91,200 would now pay N45,600 per annum. In the second category, a N20 million property expected to pay N30,720 will now pay N23,040 per annum, while in the third owner-occupier category, the charge on the same N20 million valued property would now be N7,752 per annum instead of N9,120 initially proposed. 

While these reductions are expected to placate aggrieved interests, the reality is that most property owners in the state want further reduction of the land use charge to a bearable level. They are interested in further negotiations with the government to ensure a win-win situation for all stakeholders. This is the area the state government should address now. It is true that the government is in need of funds for its development projects. But government should factor in the interests of the property owners, who are saddled with other taxes as well. The government must strike a balance between developmental drives and upholding the welfare of its citizens.

Moreover, the initial high increase could have had the negative effect of driving businesses to neighbouring states, which may provide a better enabling environment. At present, many businesses are already relocating to neigbouring Ogun State and elsewhere. This is a development that can hurt Lagos and which would be the exact opposite of what government may have intended with the initial LUC increase.

We enjoin the government to thoroughly interrogate its new proposals and allow public to examine them before passing them into law. In this contentious LUC case, there is ample evidence that the law was rushed through the Legislature without sufficient interrogation. Let government be open to more discussions and dialogue on the matter in the interest of all stakeholders.

Rapheal :

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