A Critique Of The Land Use Charge Law Of Lagos State 2018

• Incentives/Reliefs

  In order to ease payment and promote general compliance, the new Land Use Charge Law incorporates certain incentives such as 100% relief for pensioners³⁵; partial reliefs for owners on the consideration of their age & retirement status, depreciation Rate of the property, physical challenges/disability; duration of residency, and the speed and efficiency with which the property owner usually pays the LUC³⁶. The definition of a pensioner under the new Land Use Charge Law covers only a person who retires from a pensionable office of the Lagos State’s civil service. In our view, this provision is discriminatory, as same does not seem to take into account millions of residents in Lagos who are retirees from either the services of the Federal Government or private establishments. We believe a better approach would have been a total exemption for elderly property owners (particularly owner-occupiers) of 65 years of age and above.

• Establishment of an Assessment Appeal Tribunal

  An Assessment Appeal Tribunal (“the Tribunal”) has been constituted under the new Land Use Charge Law as a quasi-judicial body, established to receive and determine complaints from the public on overvaluation or exemption of their respective properties³⁷, with additional powers to adopt Alternative Dispute Resolution (ADR) mechanisms³⁸. We note that this is a laudable development which was lacking under the repealed 2001 Law. We believe that this initiative (particularly the mandatory provision in section 25(1) for parties to a dispute to submit to a confidential mediation) will aid fast and amicable resolution of LUC related disputes, as it will give room for negotiation among the contending parties.

• Conditions for Appeal

  The new Land Use Charge provides that Notice of Appeal is to be given to the Tribunal, as opposed to the Commissioner for Finance under the repealed 2001 Law. We believe this provision will lead to efficiency in dealing with such as appeals. Also, any person who feels aggrieved for any reason relating either to the taxability of his/her property or the amount payable thereon is now required to deposit into the State’s Land Use Charge Account, an amount equivalent to a reduced sum of 25% of the assessed annual LUC being disputed³⁹, as against the deposit of 50% under the repealed 2001 Law, which was a bit too much in the circumstance when someone is contesting LUC.

• Offences and Penalties

  The penalty for contravention of the provisions of the new Land Use Charge Law has been increased to a maximum fine of Two Hundred and Fifty Thousand Naira (N250,000.00) as against One Hundred Thousand Naira (N100,000.00) applicable under the repealed 2001 Law⁴⁰.

• Appointment of Consultants

  The new land Use Charge Law empowers the Commissioner for Finance to appoint Professional Valuers and other Consultants such as Property Identification Officers, who shall not be less than six (6) in number, to carry out property assessments and levying of the LUC. The agreement under which the Consultants are appointed shall be subject to the ratification of the Lagos Assembly and be further registered with the Lagos State Valuation Office⁴¹. Under the repealed 2001 Law, the appointments of such Property Identification Officers and qualified assessors as consultants was neither subject to legislative ratification nor made registrable with the Lagos State Valuation Office. We are of the view that the new requirements for ratification by the Lagos Assembly and registration are good measures for ensuring checks and balances as well as promoting transparency and best practices.

• Failure to Remit Land Use Charge Collected

  The new Land Use Charge Law provides that any Consultants appointed in accordance with its sections 5(2) and 6 and who fails to remit any LUC collected from payers as appropriate, commits an offence and shall be liable to refund the amount not duly remitted, and in addition to the refund, pay penalty of a sum equivalent to 25% of the amount not duly remitted. Besides, such Consultant may further be liable to imprisonment for a term of six (6)⁴². In our view, the criminalization of failure to appropriately remit LUC collected by appointed Consultants with specified penalties will go a long way, in addressing the challenges of leakages and misappropriation of public funds.

• Power of Enforcement & Right of Action

  In addition to the power to institute legal action (if payment is not received after one hundred and thirty five (135) calendar days after the receipt of Demand Notice) for an order of court for distrain of a property, such that same is brought under enforcement for the purpose of attaching accrued earnings on the relevant property for the settlement of all outstanding LUC (which was also the position under the repealed 2001 Law),; the Attorney General of Lagos State has been granted additional powers, under the new Land Use Charge Law, to attach the goods or earnings of defaulting chargeable persons pursuant to a liability order made by a court of law⁴³.

 Remarks

Whilst the consolidation of property and land based charges, stated as one of the main objectives of the Land Use Charge Law 2018 is a laudable idea, it is worthy of note that the repealed 2001 Law also provided for same. Save for the few, new developments and certain changes introduced; the main thrusts of the repealed and new laws are virtually the same. Therefore, it would have been better to simply amend the 2001 Law in order to incorporate the highlighted new initiatives.

The way and manner in which the new higher rates for LUC in Lagos State were introduced pursuant to the new Land Use Charge Law are symptomatic of a unilateral legislative process exclusive of the populace. Expectedly, the commencement of the new Land Use Charge Law has been greeted by widespread hot debates and mass protests among persons, businesses and professional groups resident in the State, including the Organised Private Sector⁴⁴. The measures taken by the State Government in addressing relevant concerns following protests (such as reductions of rates up to 50%; waiver of penalties for late payment; and introduction of payment by installment as announced by the Commissioner for Finance), have not been able to address the crises⁴⁵.

The harsh economic situation in the Country and the challenging nature of property acquisition and leasing of properties in Lagos State have been cited as the reasons why there is mass agitation against implementation of the new Land Use Charge Law. There seems to be a consensus of opinions that the State Government did not take cognizance of the effect the legislation will have on lease/tenancy transactions in Lagos State, as landlords will likely pass on the responsibility for paying the new higher rates to tenants by way of increase in rent. We are of the opinion that the inauguration of a six (6) man ad hoc committee⁴⁶ by the Lagos Assembly on Monday, March 19, 2018 to review the Land Use Charge Law 2018 presents a fresh opportunity for the Government to fully engage the public with a view to arriving at a common and mutually beneficial position on the Law and we sincerely hope that this will be achieved.

35 A pensioner is defined as “a person who retires from a pensionable office in Lagos State”. See “Interpretation”, section 1, Land Use Charge Law 201836 Section 10(3), ibid

37 See sections 17(1) and 23, ibid

38 See sections 23(e) and 25(1)

39 Section 26, ibid

40 Section 29, ibid

41 Sections 5(2) and 6, ibid

42 Section 32, ibid

43 Section 28, ibid

44 The Nigerian Bar Association (Ikeja Branch) staged a protest on Tuesday, March 13, demanding for a reversal of the law by the State Government. The NBA was supported by the National Conscience Party (NCP), Committee for the Defence of Human Rights (CDHR) and Joint Action Committee (JAC), among others. See “NBA, others protest, warn Ambode against new land law”, The Punch, Wednesday, March 14, 2018 @ http://punchng.com/nba-others-protest-warn-ambode-against-new-land-law/

45 There have been arguments on the validity and legality of amending a legislative enactment passed by the Lagos Assembly and assented to by the Governor through mere press conferences and public notices. The NBA Ikeja Branch has reportedly vowed to continue with its protest until the Lagos State Government reverts to status quo on the land use charge. See “NBA vows to continue protest over Land Use Charge”, Vanguard, Tuesday, March 20, 2018 @ https://www.vanguardngr.com/2018/03/nba-vows-continue-protest-land-use-charge/

46 See “Land use charge: Lagos assembly sets up review committee”, The Guardian, Monday, March 19, 2018 @ https://t.guardian.ng/news/land-use-charge-lagos-assembly-sets-up-review-committee/

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