What the LUC Law 2018 is all about
Who Pays What?
• If you are a landlord and you are the only one living in your house with your family (no tenant). Your annual fee is 60 per cent of the value of the house × 0.076. For instance, if your house is valued at N20 million. Your fee is 0.076 per cent of (60 per cent of N20 million) is 0.076 per cent x N12 million which is N9, 120.00 per annum.
• If you rented out the house to tenants only and you don’t live there and the house is worth N20 million. You will pay 0.76 per cent of (60 per cent of N20 million) is 0.76 per cent of N12 million is N91, 200.00
• If you are a landlord living with your tenant in the same building of the above value. You will pay 0.256 per cent of (60 per cent of N20 million) is 0.256 per cent × N12 million is N30,720.00
According to the government, the upward review of the LUC Law was to increase the state’s internally generated revenue and expand its tax base. But the ambitious intention of the government drew flaks from a section of the society.
Critics of the revised law, especially property owners, want the government to roll back the review over fears that its implementation would adversely affect their businesses.
But, the government said there was no cause for alarm as the augmentation on owner-occupier property was marginal. It explained that the review was done in line with the prevailing economic realities and in the overriding interests of the future of Lagos as a mega city.
At a parley with business executives last week, Governor Akinwunmi Ambode, explained to property owners what informed the review, adding that his doors were opened to dialogue.
Not a few stakeholders blame the misgiving of some residents on the dearth of communication and education of tax payers before the government unveiled its plan to commence the implementation of the revised law.
One of the captains of industry at the governor’s parley with business executives, Alhaji Aliko Dangote, the Group President of Dangote Group, said the business environment in the Centre of Excellence was friendlier than what obtained in others states.
Speaking at the forum tagged: “Lagos means business”, Dangote described Ambode’s explanation as a demonstration of his passion to take the state to loftier heights.
He said the economic drive by the government was one that required the support of all and sundry by performing their civic responsibility of paying their taxes as and at when due.
Dangote said: “I am more convinced now and I think people should really be voluntarily paying taxes in Lagos. I think for the people who are doing business here, Lagos is the most-friendly states in Nigeria. If you really want to know, try other states and you will see…
“I am not advertising for Lagos but there is not a single time you go with a problem and the governor will ask you to go and come back tomorrow because in most cases, he will call everybody and say let us sit down and sort out the issues. So, your Excellency, we congratulate you and assure that we will continue to support you.”
A tax expert, Taiwo Oyedele, appealed to the government to improve its communication and engagement with stakeholders on the revised LUC Law. He spoke of the need for the government to do more explanation on how it worked and computed the new rates to prevent misinterpretation and controversy.
Oyedele, the Head of Tax & Regulatory Services, PricewaterhouseCoopers (PwC) Nigeria, spoke with the News Agency of Nigeria (NAN) in Lagos at the weekend.
He said: “Government needs to communicate better and engage people more. May be the implementation from when the law was announced was too quick and people did not have enough time to digest it.
“It is important for government to clarify and simplify the computation so that an average property owner can compute it without any external assistance.
“There are lots of miscalculations and misinformation on the social media because people do not understand how to calculate it.
“On a N100 million worth of an owner-occupied property, you would pay less than N50, 000 per annum.
“If the N100 million property was for commercial purpose, that is you are renting it out, you would pay about N200, 000.
“Effective communication for development is necessary to amplify voice, facilitate meaningful participation and foster social change,” the tax expert said.
Also yesterday, the Centre for Public Accountability (CPA) threw its weight behind the government, saying the outrage over the new law was uncalled for.
In a statement by its Executive Director Olufemi Lawson, the CPA said the Ikeja Branch of the Nigerian Bar Association (NBA) erred by issuing the Ambode-led administration a seven-day ultimatum to reverse itself on the LUC Act.
It said the professional body threw etiquettes into the wind by offering itself as mouthpiece for those it classified as “tax evaders”.
The statement reads: We, at the Centre for Public Accountability (CPA) as well as our civil allies across the nooks and crannies of Lagos State are concerned at the implications of recent outcry and what we observe, as the crocodile tears being shed by a seemingly privileged, social segment of the Lagos State populace on the implementation of Land Use Charges Law, 2018.
“The most comical of these groups, is the Nigerian Bar Association (NBA), Ikeja Branch, that has thrown professional etiquettes to the winds, abandon its well-cherished traditions as the defender of the less privileged and socially alienated to become the mercenary megaphone of some over pampered, higher middle class perpetual public tax evaders.”
The CPA described as condemnable the purported threat by the Ikeja branch of the NBA to call its members out on the streets should the government refuse to roll back the law by this week.
It said: “Our take up point in this brief intervention would be to condemn in unmistaken terms, reports in the news media, particularly that of The PUNCHnewspaper of Thursday, 8th, 2018 where a purported seven-days ultimatum was issued to the Lagos State Government by one, Mr. Adeshina Ogunlana, the Chairman, NBA, Ikeja branch to reverse the Land Use Charge Law, 2018. An act that was never a product of arbitrary proclamation of the state governor!
“It is a great wonder that learned men of the legal profession cannot simply take the civilised means of rectifying of perceived social injustice by approaching the competent court of law to seek judicial pronouncement on the law, but rather gentlemen of the legal profession are threatening fire and brimstone to take laws into their own hands by disrupting law and other in the state.
“We unequivocally condemn the plan of Ikeja NBA to cause public riot in the state if the law is not reversed. Need we remind the NBA, Ikeja Branch, that other well-meaning Lagos civil society organisations like ours are at liberty to rally round our members to equally protest the attempt of the Bar to instigate chaos in the state.
“We recall that the NBA, under the late Alao Aka-Bahorun and Olisa Agbakoba played progressive roles while lawyers like the late Kanmi Ishola-Osobu and Chief Gani Fawehinmi always tilt towards the majority poor and not a minority, few privileged cabals.”
“It is trite in law to re-emphasise that equity does not aid the indolent who sleep on their rights. It also put in place a defined, scientific and progressive tax system that weighs heavily on the upper class of the society who do not always want to pay tax. Since over 15 years that the law was first enacted, despite astronomical inflationary index, the minimum charge in 2001 was N1,200 (One Thousand and Two Hundred Naira) and in 2018, it is N5,000 ( Five Thousand Naira), it is only the super-rich with exotic properties in choice locations like Lekki Peninsula, Ajah, Victoria Garden City, most of whom are rentier owners with suspicious means of income yet that are paying more because of the progressive nature of the charges.
“The proceeds accruing from these charges are statutorily bound to be shared between the Lagos State Government and the 57 Local Government Areas and Local Council Development Areas to finance the infrastructural deficit of the fast-growing mega city.
“The law set out self-assessment criteria for property owners and established a Land Use Charges Assessment and Appeal Tribunal (LUCAAT). The charge rate’ self-evaluation process is as simple as contextualised below:
“Clearly, this fact speaks for itself that the aim of the law is to ensure that properties are properly and progressively valued with a lesser burden on the less-privileged. It should be added that the value of properties also varies from one location to the other”.
LUC Act with a Human Face
• A general 40 per cent relief for all property liable to LUC payment, a 10 per cent relief for owners and occupiers with persons with disabilities.
• A 10 per cent relief for owners and occupiers of 70 years and above.
• A 10 per cent relief for properties above 25 years, a five per cent relief for properties occupied by their owners for over 12 years,
• A 20 per cent relief for non-revenue generating federal and state government property
• 20 per cent partial relief for non-profit making organisations.
• Pensioners, churches, mosques, palaces, public places are exempted.
Why the Fuss
To the CPA, the super-rich and the elite have been crying wolf where there was none.
It said: “CPA notes that it has become a norm in our country that most privileged individuals in our country only want to benefit maximally from the society without giving anything back as a birthright.
“Most elected politicians usually run to procure tax certificates when they are vying for elections which means they don’t pay taxes unless when it becomes highly imperatives.
“In the same manner, even private companies deduct taxes from and other statutory deductions like pensions, health and housing schemes from employees but don’t remit same.
“The public sector is even worse, they make the deductions and loot them into private accounts, the cases of the alleged scandals in the pension funds and the National Health Insurance Scheme (NIHS) are still very fresh in our minds.
“It is in the character of Nigerian upper-middle class to illegally corner wealth and store same in tax haven as has been revealed with the Panama Papers and other mind-boggling revelations of Nigerians try to evade paying appropriate taxes.
“The Minister of Finance, Mrs. Kemi Adeosun, is presently leading a Federal Government campaign on Voluntary Assets and Income Declaration Schemes (VAIDS) to encourage notorious tax evaders to pay within a clemency period or face stiff penalties and prosecution.
“Every rational person knows that tax is a fundamental means for government to raise resources to meet up with the provision of social amenities that make life more amenable to the citizens.
“The LUC Law is only unique to the extent that it aspires to progressively tax the more privileged citizens to help in providing humane living environment for the less privileged.
This is however not accidental, the government has over the years provided good ultra-modern environments for people living in areas like the Lekki Peninsula, Ajah, Ikoyi and Victoria Garden City, now the same government is asking people who have properties in these places to pay quality and commensurate land use charges so that other areas of the State like Ajangbadi, Ikorodu, Ajegunle can be upgraded.
“We call on all Lagosians to join hands at ensuring that even when there is en-even development in various areas of the state, that there is also a combined development whereby, those areas that are more socio-economically advanced give a helping hand to bring up areas that are still crawling.
“This is the main social kernel of this LUC Act; it is a tip of social redistribution of growth and social equity to all. The super-rich should stop crying wolf and pay up.”