Presentation on theme: "CURRENT ISSUES IN PROPERTY TAXATION"— Presentation transcript:
1 CURRENT ISSUES IN PROPERTY TAXATION ABIOLA SANNI, LLM., B.L., FCTI
2Outline Definition of Terms Principles of Property Taxation Constitutional basisLand Based taxes in NigeriaCurrent IssuesConclusionof a federal system
3Definition of property In a general sense, property is that which is peculiar to anyone: That which belongs exclusively to a person such as money, land, personal chattels or incorporeal (intangible) property.Two broad types of propertypersonal - automobiles, jewelry, furniture, clothing, etcreal - means land including whatever is erected or growing upon or affixed to land.
4Posers What distinguishes the one from the other? Do you think personal property should be taxed? Advance argument for and against.In practice property taxes are narrowly defined due to several considerations verging on policy, law and administration.
51.1. Definition of taxation This is the process of raising revenue for public finance through compulsory payment imposed by government on persons, things or activities for which no direct benefit accrues to the taxpayer. Therefore, payment is not based on the condition that the road leading to the property will be tarred at a particular time or that refuse will be disposed in exchange.This is the bright line rule – No qui pro quo.The name or title given the tax does not matter
6PoserIs Land Use Charge a taxWhat of council tax in UK
71.3. Meaning of “current issues” Burning and fresh development or vistas.
82.0. Principles of Property Taxation It is usually a local tax – Does “local” necessarily mean Local Government or State or both?It is a major source of revenue for the local governmentGeneral public finance – local amenities and infrastructure.Usually imposed on the occupierLimited exemptions
92.1. Constitutional basisSee item 1(j) of the Fourth Schedule of the Constitution which provides:“1. The main functions of a local government council are as follows:(j) assessment of privately owned houses or tenements for the purpose of levying such rates as may be prescribed by the House of Assembly of a State;
10Please note the following: Limited to “privately owned houses or tenements”. See Shell Petroleum Development Company of Nigeria Limited v Burutu Local Government Council (2000) 1.NRLR, p.1.Tenement is not synonymous with “Property tax”Para 1(j) of the Fourth Schedule is not a direct grant of taxing power to Local government
11Please note the following: State law is required to establish the framework of tenement rate. In FCT there is no property tax as such but assessment under AGIS in form of fees. This is an aberration. For example, there is no established appeal procedure where a taxpayer is aggrieved.
123.0. Land Based taxes in Nigeria Tenement rateLand RatesNeighborhood Improvement ChargeLand Use Charge
133.1. TenementSee generally Tenement Rates Law of Lagos State No. 10, 1989, Cap T2, Laws of Lagos State of Nigeria, 2003.Tenement is “land with building on it which is held or occupied as a distinct or separate holding or tenancy or any wharf or pier but does not include land without building. See section 51 of Tenement Rates Law of Lagos State, No. 10, 1989, Cap T2, Laws of Lagos State of Nigeria, 2003
14Tenement contdFor a judicial definition see Shell v Burutu Local Government Council (Supra):as “building on land and all other immovable properties which are permanently attached to land but does not include vacant land.” In Shell v Burutu Local Government council. (Supra)The thrust of these definitions is that tenement rate is a tax on immovable property except vacant land.
15PoserIn view of the narrow definition of tenement can a State Government impose tax on other forms of properties?Why not?
163.1.1. Liability to pay Tenement Rates Section 36(1) of the Law places the liability to pay rates on occupiers or subsequent purchasers of a tenement. The real owner, if different from the foregoing, is secondarily liable. Note there is departure from this design under section 4 of the Land Use Charge Law which imposes the obligation to pay on the owner.
17Posers What is the basis of this in your view? Who bears the obligation to pay is very important when drafting a lease or tenancy agreement where the intention is to shift the burden to the lessee/tenant.
183.1.2. Due Process under Tenement Rate Law Establishment of a Valuation Office, which is charged with the assessment of all rateable properties in the State. Zonal Offices are also provided for each Local Government Area. Thus, there is decentralisation.Zonal offices are the rating authority for their respective areas of jurisdiction.
19AppraisersThe law specifically stipulates that appraisers must be qualified Estate Surveyors and Valuers registered by the Estate Surveyors and Valuers Registration Board of Nigeria.Deal with the assessed value of the tenement.
20Appraisers contdHe is empowered to require any person to give information, which may affect the value of the tenement. He may also call on any taxpayer to produce any accounts, receipts for rent or other documents connected with the valuation of a tenement and to enter into and take measurements and other particulars that may be necessary for the purpose
21Appraisers contdThe Law envisages the reassessment of properties at least once in every five years.Following each assessment or reassessment, the Valuation Office issues a list of the affected tenements and their respective valuation.
22Appraisers contdNotice of every valuation list or amended valuation list is publicized to property owners in the Official Gazette of the relevant State or in any of the widely read daily newspapers. The notice also gives information as to the place at which the list may be inspected, and allows a period of 21 days for such inspection. In addition to the general notice, every property owner must be given an individual notice showing the current assessed value of his property.
23Appraisers contdObjection to the Local Government – may be by the owner or occupier.Appeal to the Assessment Appeal Tribunal
24PosersRegrettably, most of these standard procedures under the TRL are departed from under LUCL.This touches on due process which may render assessment liable to judicial review.
253.2. Land RatesLand Rates are charged under the Land Rates Law of Lagos State. The Law applies to state allocated land and imposes on the owner:Development levy,ground rents,premium, andother incidental rates.
263.3. Neighbourhood Improvement Charge The Neighbourhood Improvement Charge Law applies to private estate or property (developed or undeveloped) designated as an improvement area by the State. A property or estate may be designated as improvement area by the Governor where he is satisfied that:
273.3. Neighbourhood Improvement Charge contd an infrastructure has been provided as by the State government at the public expense or by any agents in a neighbourhood; the quality of a neighbourhood has improved as a result of state government effort; oran estate or developed or undeveloped property or land is neglected or is not being properly maintained.
283.4. Land Use ChargeLand Use Charge is payable annually on the value of all real properties situated in Lagos. The Law makes each local; government the collecting authority within its territory. However, section 1(3) provides that each local government may by written agreement delegate the collection of rates and assessment of privately owned houses or tenement to the State. See Knight Frank & Rutley v A.G of Kano State  4 NWLR (Pt.143) 210.
29LUCL contdNote that the nature and incidences of the Tenement Rate Law, Neighbourhood Improvement Charge and Land Rates are substantially different. Therefore the argument that the consolidation of the three laws will reduce tax burden is lame. What is more, it is strange for the LUCL which purports to consolidate all the land based taxes not to repeal the pre existing laws.
30LUCL contdFor a discussion of legal issues arising from the LUCL see Prof. Yemi Osibajo, “Property Taxation as a Catalyst for Development – Land Use Charge Law of Lagos State” (2003) Vol. 22, The Journal of Private and Property Law, p.1.Sanni, A.O. “The Controversial Lagos Property Tax” (2003) Vol. 23, The Journal of Private and Property Law, pp
314.0. Current IssuesAre there really such issues in view of the underdevelopment of property taxation in Nigeria?Current tax reform at the Federal levels has neutral effect on PT.
324.0. Current Issues contdSome States have reformed their property tax – Lagos, Cross Rivers State.What are the developments in Ogun State – participants to share their experience.Is it a sustainable means of local financing? What other forms of local taxation will you recommend?
33ConclusionDevelopments in Nigeria have shown that local government tax system is presently too weak to efficiently administer tenement rate. We have to think out of the box on how to optimize this important revenue source in terms of design and structure. I admonish States to be original in fashioning their tenement rate law or property tax law as the case may be.