ABIOLA SANNI, LLM., B.L., FCTI
abiosanni@yahoo.com<08033958020>
CURRENT ISSUES IN PROPERTY TAXATION
Outline
 Definition of Terms
 Principles of Property Taxation
 Constitutional basis
 Land Based taxes in Nigeria
 Current Issues
 Conclusionof a federal system
Definition 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 property
 personal - automobiles, jewelry, furniture, clothing, etc
 real - means land including whatever is erected or
growing upon or affixed to land.
Posers
 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.
1.1. 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
Poser
 Is Land Use Charge a tax
 What of council tax in UK
1.3. Meaning of “current issues”
 Burning and fresh development or vistas.
2.0. 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
government
 General public finance – local amenities and
infrastructure.
 Usually imposed on the occupier
 Limited exemptions
2.1. Constitutional basis
 See item 1(j) of the Fourth Schedule of the 1999
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;
Please 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
Please 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.
3.0. Land Based taxes in Nigeria
 Tenement rate
 Land Rates
 Neighborhood Improvement Charge
 Land Use Charge
3.1. Tenement
 See 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
Tenement contd
 For 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.
Poser
 In view of the narrow definition of tenement can
a State Government impose tax on other forms of
properties?
 Why not?
3.1.1. 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.
Posers
 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.
3.1.2. 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.
Appraisers
 The 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.
Appraisers contd
 He 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
Appraisers contd
 The 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.
Appraisers contd
 Notice 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.
Appraisers contd
 Objection to the Local Government – may be by
the owner or occupier.
 Appeal to the Assessment Appeal Tribunal
Posers
 Regrettably, 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.
3.2. Land Rates
 Land 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, and
 other incidental rates.
3.3. 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:
3.3. 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; or
 an estate or developed or undeveloped property or land
is neglected or is not being properly maintained.
3.4. Land Use Charge
 Land 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 [1990] 4 NWLR (Pt.143)
210.
LUCL contd
 Note 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.
LUCL contd
 For 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.71-92.

4.0. Current Issues
 Are 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.
4.0. Current Issues contd
 Some 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?
Conclusion
 Developments 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.
GRATITUDE
THANK YOU FOR LISTENING.