Land Use Charge In Lagos State: What It Is And What It's Not

Sequel the the thread that made the front page last week, wherein I promised to create a topic to address the issue, I've decided to do so in series. On this thread, we would try to address critical issues regarding the LUC and how it affects you.

What is property tax? According to wiki: A property tax or millage rate[1] is an ad valorem tax on the value of a property, usually levied on real estate. The tax is levied by the governing authority of the jurisdiction in which the property is located

The above definition tells us that it a tax on real estate asset, let me say tangible assets, like your land and all improvements on that land.

What is Tenement rate in Nigeria, we came to know the property tax as tenement rate, which could mean the same thing. In other country, they call it property tax, but in Nigeria, it was known as tenement rate. The local government do collect it prior to 2001 in Lagos State, Hence its a local tax by the local administration on all properties at the province or local level to generate income for the government, in oder to provide infrastructures.

What is Land Use Charge? As posited above, we had the tenement rate and some other property based taxes that are to be paid by owners of land (not tenants). Bola Ahmed Tinubu became Governor of Lagos State in 1999 and realized the poor collection of the tenement rate and inability of the local government to point out strategic programs that the funds were channeled to. Remember, we were under the military rule until 1999, hence the corruption was so obvious.

BAT then created the LUC, which unified the entire taxes to be paid on land as the Land Use Charge. The land Use charge is the combination of tenement rate, Neighborhood charge and Ground rent. Let me explain what Neighborhood charge and Ground rent means

Tenement rate: Tax payable annually on your landed property in the area it is located, to local government
Neighborhood Charge: Payment of tax for the uplift of the neighborhood where your property is located
Ground Rent: Remember the land use Act of 1978 vested the ownership of all Land to the State government, hence everyone is a tenant with the government for 99 years. Remember also that your C of O is only for 99 years max, hence the rent you pay Government annually is called Ground rent. Payable to the state government

The above 3 distinct taxes were harmonize by BAT as one and the responsibility of collection was placed in the hands of the state government, who will then spend the money on the entire state for the benefits of all. For instance, Instead of the local government chairman to collect tenement rate on a property worth N5 billion naira in Ikoyi and spend the money on frivolous things like boreholes etc the state government will collect and spend on meaningful projects spread across the 20LGAs and 37 LCDAs

In 2001, BAT came up with the Land Use Charge Law No. 11 of 2001 of Lagos State. The Land Use Charge Law which is applicable to all properties in Lagos State as a unified property charge, came into operation on the June 22, 2001 (“LUCL”).

The LUC has been there since 2001 and all forms of tenement rate was no longer collected after the unification. But many Nigerians do not know. Nigerians, I mean all of us, cos Igbo's, Yoruba's, Hausa, TIV, American, British, Lebanese, Indian, Ghanians etc own properties in Lagos. Many ous do not pay taxes at all on anything. This is the truth.Up till today March 3rd, many of us don't even Pay at all, but we love to criticize the government.

Remember, Tax is a civic responsibility. Go to UK, ask all the players in the EPL how much they pay as taxes. It's up to 30% of what they earn weekly, hence the UK is progressing cos of successful tax administration.

Conclusion, LUC had been with us since 2001, but since we don't pay, we have no idea that it exist. The Government of BAT and Fashola didn't do much to enforce payment and since 2001 to amendment or increment and less than 300,000 properties pay LUC in Lagos State out of over 2,000,000 houses that we have in the Lagos State.

LUC should not be confused as income tax, VAT, Capital gains Tax, Capital Transfer Tax, consumption tax etc.
LUC is tax payable by a Landlord. The person who has money and decided to buy property with his money. The government will tax you and use the money to provide houses for others. Houses are not only for the rich. The poor too deserves to own properties.

I am privileged to have traveled to some countries and did enquire how they do it.

In South Africa, UAE, England, USA, Canada, Japan, Australia, Ethiopia, Ghana etc all these are applicable.

If you don't own a property, you're not to pay Land Use Charge. It is an ownership tax.

Tell your landlord I said so and it is backed by Law.

All tenants should relax, as this is not for you.

As a private citizen of Nigeria, residing in Lagos, I pay the following

1. Income tax monthly to State government
2. VAT to Federal Government
3. Consumption tax to state
4. LUC to state government cos I own properties

These are applicable in most countries that I've visited.

There are other taxes that has nothing to do with real Estate eg
Consumption tax
VAT
Income tax
Stamp duty
Capital transfer tax etc

I created this thread to educate us on the history of LUC, in order to educate people and would be creating other parts later this month to address

1. The 2018 LUC law
2. Collection
3. Proposed Valuation
4.reliefs provided
5. How the money would be spent.

Feel free to share, just acknowledge the source and not plagiarize.

I am opened to answering any Question at all, pertaining to the LUC. The various LASG officials are interested in how Lagosians feels about this subject, hence they paybvery serious attention to Nairaland, based on my discourse with them yesterday

The moderators (Seun Mynd44) should do the needful by posting this important thread for all to see.

Itesiwaju Eko ati Nigeria, lo je wa logun.

God bless you all