How Land Use Charge’ll affect tenants
Although the Lagos State Government has allayed fears that the Land Use Charge (LUC) will have negative effect on tenants, there are strong indications that property owners may not escape its crippling consequences. This is because, the introduction of LUC, will definitely increase the cost of property and that will have a ripple effect on the cost of hiring property. Tenants will therefore be made to pay the difference. This will start immediately for those who are about to pay for accommodation while those who have already paid will have to wait till next year when their rents will expire.
Because of the way the LUC was introduced, residents are calling reversal of the increase slammed on land/building owners in Lagos by the administration of Governor Akinwunmi Ambode. At the vanguard of opposition to the new rate are opposition political parties, residents of highbrow estates in Lagos, business and professional associations. The state government has used all available instruments to pass the message across. But despite the efforts, the message is not going down well with residents of the state including trade professionals.
The Organised Private Sector (OPS) has already indicated that the review was not adequate.
A political party, Action Democratic Party (ADP), for instance, described the increase in the LUC as obnoxious, while claiming that the new levy would geometrically increase the level of hardship residents of the state face.
ADP argued that the increase would lead to an upsurge in rents paid by Lagosians and subsequently render many homeless. The party added that government exists for the people and people are not supposed to suffer in the hands of those who are serving them as a result of callous policies by the government of Lagos State.
“If the state government is out on an aggressive revenue drive, it should not be done in a manner that will further wreak the already poor and struggling majority in the state,” ADP added.
For its part, the Nigerian Bar Association (NBA), Ikeja branch, expressed displeasure at the new charges, which it argued will lead to further impoverishment of over 17,000,000 Lagosians.
NBA maintained that the poor economy is already negatively affecting the people while urging the governor to be sensitive in implementing policies that would gravely affect the residents of the state. According to the lawyers, if after seven days, Governor Ambode fails to reverse the new charges under the LUC Law 2018, they will go out on full protest.
Speaking on the planned protest, the Chairman of the branch, Mr. Adesina Ogunlana, said the protest march tagged, ‘Hell’ would start from the branch secretariat in Ikeja all the way to the Lagos State Secretariat in Alausa. Ogunlana said the branch was set to begin the first phase of critical and constructive response to the “decidedly insensitive, provocative, arbitrary and parochial tax agenda programme” against the Ambode administration. According to him, it is clear that if these regimes of tax are allowed to stay, Lagos would be turned into a toxic environment and a living hell.
“Even ordinarily in Lagos State, accommodation is only cheap and easily affordable for those who live in the parks and under the bridge. The governor should not hide under the umbrella of working to develop Lagos into a mega-smart city to kill Lagosians with pharaonic taxes. We urge the governor to rethink his decision and immediately scrap the increment in the LUC or risk being voted out of office as he is seeking second term.”he said.
Similarly, the Manufacturers Association of Nigeria (MAN), said stakeholders were not consulted before the decision to increase the charges was made.
They added that the increase would contribute to the folding up of many companies in Lagos. MAN, through its President, Frank Jacobs, noted that the state would be setting a bad precedence for other states if the law stands. Jacob also noted that members of MAN would be affected by the law because it will lead to increase in the price of locally-made goods and finished commodities in the state thus killing local companies in the country.
But the governor, at a parley with the OPS, tagged: “Lagos Means Business” held at the Eko Hotel and Towers, Victoria Island, Lagos, recently told the audience comprising business moguls and captains of industry that the LUC was supposed to be reviewed every five years, but lamented that the law had not been reviewed since 2002 when it was set up, which spanned about 15 years. But those who analysed the matter believe that successive governments ran away from it on the ground of its sensitivity and economic conditions of the citizens. They argued that it was insensitivity that beclouded his sense of reasoning coupled with the massive support he got during the elections that brought him as governor.
The governor maintained that, “now, the question is this; those who are having commercial property, if they compare the rental income they were getting in 2002 against the rental income they are getting in 2017, are they the same? The issue is this, the level of infrastructure that existed in 2002 as against what has happened in the last 15 years, are they the same? Did it not come at a cost? So, why is the market value of the property you built with N1 million, 15 years after, now selling at N20 million?
“Why do you think somebody who is a buyer will pay N20 million for it? Is it not because of the facilities around the property? So, we have to sacrifice; that is how it works everywhere. So, somebody comes and says we have increased by 400 per cent. The question is, the 400 per cent of what? You were paying N10,000 before, now we say you should pay N50,000 and you are calculating and turning statistics upside down by saying it is 400 per cent. Is it not still small?” Ambode asked while justifying the increase in LUC.
To make the bill pass through, the Commissioner for Finance, Mr. Akinyemi Ashade, laboured in his capacity as the man in charge of the court and said that the government has extended the period for taxpayers to enjoy the 15 per cent discount in the reviewed LUC law to April 14, 2018 to enable the implementation and enforcement of the new law, as well as allow many property owners to benefit from the discount.
Ashade took time to clarify reactions to some sections of the public on the new law. He explained that under the old law, which had not been reviewed for over 15 years, the LUC rate was totally inaccurate and retrogressive and was depriving the state of keeping track of all economic activities that relate to land in Lagos State.
He stated that the rates, which were reviewed by the Lagos State House of Assembly and signed into law by the Governor on February 8, 2018, is a merger of all property and land-based rates and charges in the state.
According to him, the new law is a consolidation of ground rent, tenement rate, and neighbourhood improvement levy.
This charge is payable annually in respect of all real estate properties in the State, which means owners and occupiers holding a lease to a property for 10 years or more are now liable to pay the annual LUC invoice charged. Thus, the Tenement Rates Law, the Land Based Rates Law, the Neighbourhood Improvement Charge and all other similar Property Rates or Charges, Laws or amendments to any such property Laws shall cease to apply to any property in Lagos State as from 2018. Nonetheless, all pending invoices, orders, rules, regulations, etc. under the 2001 repealed Law shall continue to be in effect until such obligations are discharged, “he stated.