Despite the kick-off of the new Land Use Charge payment in Lagos State by Governor Akinwunmi Ambode, real estate developers, who are major investors and practitioners have continued to fault the new property tax. They argued that it would discourage investment at a time many houses are still begging for occu- pation in the metropolis.
Specifically, former President, International Federation of Real Estate , Nigeria Chapter, Chief Kola Akomolede, said it was wrong for the government to base an annual tax on capital value of a property.
Rather, he said that it should be on the income being generated on the property per year. Speaking with New Telegraph in Lagos, he explained that in other climes, property tax is based on annual income (rent) from such property, rather than income on the entire value of the asset.
He said: “From what I have read, the tax is still based on capital value – an annual tax- it is like saying your annual income tax is based on your salary or income for your entire life. Your annual tax should be based on your annual income. If you earn N5million in a year, you can only pay tax on that N5million in a year, not to look for the next 20 years as tax.
That is what the government has done. “What of if the value of my property is N100million, they are basing my tax on N100million, No! The Government should calculate what we called ‘annual value’, which is like rent from the property per year.
That is the income from the property if I let it out or not. If the annual income of the property is N5million, the government should only tax certain percentage of that N5million.”
In one of the interviews monitored, Managing Director, UACN Property Development Company (UPDC), Hakeem Oguniran, noted that the structure of the Nigerian economy is not in favour of real estate and the investors. He said that basing the land use charge on capital gains was inappropriate at a time when many houses were empty because they could not find buyers or tenants.
The new Land Use Charge Law (LUCL) 2018, which applies to real and landed property in the state, seeks to consolidate all property and land-based rates/ charges into a single property charge and sets modalities for levying and collection of land use charge in the state.
The charge, which is to be collected along with tenement rates by local government authorities, is now based on the capital values of properties rather than rental income.
Governor Ambode, while Kick-starting the payment of the new land use charge in the state, said he had just invested his quota by paying his Land Use Charge in Lagos.
He enjoined residents/ citizens to join him by courageously making a decision for prosperity and pay all their due taxes, giving them assurance that with their full support, there has been an evidence that every kobo paid in taxes, has been productively utilized in infrastructural renewal and development of the state in the last two and a half years.
Also, professionals under the auspices of Nigerian Institution of Estate Surveyors and Valuers had already raised dust over the market value’s formula adopted for the new land use charge in Lagos.
Chairman of Nigerian Institution of Estate Surveyors and Valuers, Lagos Branch, Mr. Olurogba Orimolade, faulted the formula, saying it was defective to apply the same formula for residential, commercial and industrial properties.
His Vice, Mr Dotun Bamgbola corroborated him, saying that the government should not use the same formula for residential and commercial property.