Wednesday, June 3, 2020

Lagos govt reverses Land Use Charge to 2001 rate

Lagos State Governor, Mr. Babajide Sanwo-Olu has approved the reversal of Land Use Charge, LUC rate to pre-2018 rate. However, the 2018 valuation was upheld.
LUC background
The then Governor, Akinwunmi Ambode in 2018 had reduced all levies for its new LUC that had attracted public outcry by 50, 25, and 15 per cent.
The state government had jacked up the charges payable by 400 per cent as enabled by the Land Use Charge Law of 2018.
Stakeholders had criticised the increment of the LUC, insisting that it was capable of affecting business and the general financial wellbeing of Lagos residents.
Commercial property owners were granted 50 per cent discount, while property occupied by the owner and third party and property used for industrial and manufacturing purposes was granted 25 per cent discount while owner-occupied properties granted 15 per cent discount.
Other rates and reliefs, apart from the ones stated above remained unchanged and being implemented as stipulated by the Law. It includes 40 per cent general relief, 10 per cent for 70 years and above, 10 per cent for properties owned by persons living with disability and 10 per cent for properties that are 25 years old.’’
Recall that on January 29, 2018, the Lagos State House of Assembly passed a Law to Provide For The Consolidation Of Property And Land-Based Charges And Make Provisions For The Levying And Collection Of Land Use Charge In the State; otherwise referred to as the Land Use Charge Law of Lagos State, 2018, the “LUC Law.”
The LUC Law repeals and replaces the Land Use Charge Law, 2001. Similar to the 2001 law, the LUC Law provides for a unified ‘Land Use Charge’ which consolidates all property and land-based rates and charges payable under the Land Rates Law, Neighbourhood Improvement Charge, and all Tenement Rates.
Similar to the 2001 Law, the LUC Law calculates Land Use Charge by multiplying the market value of the property (i.e. the sum of land value and building development value) by the Annual Charge Rate.
Unlike the 2001 Law, market value under the LUC Law is to be determined by professional valuers appointed by the Commissioner of Finance.
The LUC Law also includes a new ‘Relief Rate’ which is applied to the market value and charge rate.  A General Relief Rate of 40 per cent is applied in the calculation of LUC. Specific Relief Rates are also available at various rates ranging from 5 per cent  (for long occupiers of property) to 100 per cent (for pensioners). Specific Relief may be applied for by disabled persons, aged persons, owners/occupiers of old properties (25 years and above), Federal and State-owned property, non-profit making entities, and for timely payment of Land Use Charge (within 15 days). Applications for Specific Relief are made to the Commissioner of Finance with any relevant supporting documentation.
Meanwhile, Commissioner for Finance, Dr. Rabiu Olowo, disclosed the reversal on Wednesday, in his address at the year 2020 ministerial briefing to mark the first year in office of Governor Sanwo-Olu in the office which held in Ikeja.
Olowo said the state government had to review the increase in land use charge assessment to accommodate the agitations of residents and to reduce the financial pressure on citizens as it relates to land use charge.
According to him, the pre-2018 charges which will soon come into effect will reflect current realities to reduce the burden on citizens.
“The reform also considered a flexible land use charge payments and efficient customer service management in other to ensure prompt issue resolution,” the commissioner said.
On review of the procurement process, Olowo said, “It was simplified in order to reduce the bureaucracy in the state procurement process and accommodate small businesses in accordance with the Procurement Law and Guidelines.”
He said the intention of the government is to keep economic activities in the state going, without necessarily causing any untold hardship that will further aggravate the present financial hardship confronting all sectors of the state’s economy.
Olowo said among initiatives put in place in the last one year in the area of revenue optimization are: deployment of the e-tax platform for tax operations and administration matters, automation of operations of Lagos Lottery Board and FORCE, among others. conceived
He added that the state achieved 106 per cent performance in the first quarter of year2020 revenue as against budget.
Adding that the twin shock of COVID-19 pandemic and the dwindling oil prices which has affected the state revenue necessitating the review of the year2020 budget.
“The direct impact of the pandemic is a drop in the state’s IGR and Federal Allocation which also results in the decline of Foreign Direct Investment (FDI) and increased pressure on income and purchasing power of Lagosians”, Olowo said.

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