Opinion (08/03/18): Land Use Charge: Facing the hard facts – By Ayo Oyoze Baje
“Somebody needs to tell us the bitter truth, for us to sacrifice together and that is what we need”
-Gov. Akinwunmi Ambode of Lagos State
The public outrage that has so far trailed the much misunderstood Land Use Act (LUC) is understandable. Firstly, it came like a bolt out of the blues, jolting not a few house owners in Lagos state, who erroneously believed that they have to cough out millions of their hard-earned money to pay for it. And secondly, they were much unaware that those who live in their own houses, without renting them out do not have much to part with. Unknown to them too, they stand to benefit from it all in the long run.
Truth be told, the era of state governors going cap-in-hand to Abuja for the so called monthly federal allocation is gradually on its way out. Given the intense clamour for political restructuring and the attendant fiscal federalism, the time to think and act outside the box is now, not tomorrow. He has to be futuristic in his approach to issues. Indeed, he is. That explains why he is taking policies with short time pains for the long term gains.
Incidentally, Governor Akinwunmi Ambode, the award-winning technocrat-cum- politician, who has received accolades as the leader with the human face would not intentionally go out of his way to add to the pains of the good people of Lagos state. As a true leader he does not only have deep insight into the most pressing challenges his people have to contend with in their daily struggles, but has been articulating the mechanisms for sustainable solutions. That is vision. Interestingly, Henry Ford and Walt Disney had that rare attribute. So has Jeff Bezos, recently declared as the world’s richest man by Forbes Magazine.
Within the matrix of what leadership entails he cannot do it alone. In fact, he should be able to identify the critical stakeholders in the determined search for such succour, involve them and be able to explain, in the simplest of terms to the eventual beneficiaries. They ought to know, for instance, the sacrifices they have to make for now.
That, precisely is what Governor Ambode of Lagos state has done while taking a hard and holistic look at the LUC. In a rather unique but impact making format, he recently held a stakeholders meeting with the organized private sector, aptly tagged,” Lagos Means Business”. In full attendance were the likes of Aliko Dangote (Africa’s richest man), Donald Duke(former governor of Akwa Ibom), Mr. Jim Ovia (Zenith Bank) and Mr. Tony Elumelu(UBA and Heir Holding). Others included Otunba Subomi Balogun (FCMB), Chief Nike Akande (former Minister of Industry), Chief Razaq Okoya (Eleganza group) and Chief Kessington Adebutu (Premier Lotto).
Before them he laid bare the facts and figures on what the law states on the Land Use Charge and what has transpired between 2001, when it was enacted and 2017. Although, it expressly states that it should be reviewed every five years, nothing of such was done for 16 odd years!
For the rich owners of commercial properties, it would be a lie told to claim that their rental values vis-à-vis the market values of their buildings and estates had remained the same over such a long period! Yet, Lagos state keeps expanding at an exponential rate in both population and the attendant infrastructural demands. For instance, it has been projected that by 2030 Lagos will become the 3rd largest consumer market in the world with a population of 35.8 million, followed by Tokyo and Delhi.
In specific terms, for a population of 24 million and taxable adults of 8 million people only 2 million submitted their tax returns in 2017. And wait for this- only 700, 000 of this figure actually paid their tax in the past year! Though it posted an Internally Generated Revenue(IGR) of N284 billion in 2017 this cannot be compared to that of New York, Tokyo and London that boast of trillions as their contribution to the national GDP.
Yet, on a comparative analysis, according to the United Nations Population Fund (UNFPA), Lagos attracts an average of 89 people entering the city every blessed day pitched with 67 for Mumbai, 12 for New York and 7 for London. If the 2018 budget figure is spent on building the required infrastructure, the deficit will stand at a whopping N14.47 billion. So, how would a state that requires $50 billion to bridge the infrastructural deficit cope with such intimidating challenge? That is the million-Naira question.
One option before the governor is to go a borrowing. But who will pay off the huge debts when they accumulate for years? The people will bear the brunt. Sad about this development Governor Ambode has considered this as not economically healthy, or wise. In his words: “There is no need to come to you, if I continue to borrow to punish you. It is not what we want”.
The best way forward, in this prevailing circumstance, is for the upward review of the Land Use Charge in accordance with the law. It means therefore, that owners of hotels, high-rise buildings and estates have to pay the LUC. The pressure is put off those who build-to-own as the maximum charge they have to pay is N5,000. Better still, retirees/pensioners, owners of undeveloped plots, mosques, churches and palaces are exempted from the payment.
All these explanations he made should be clear to any literate citizen. But not waiting for such clarification, some people, out of mischief have gone to town crying wolf where there is none. Some, through sponsored advertorials are placing humungous figures as the jump in the LUC. How, for instance, does an increase of 0.076% of the 60% of the value of a property, with regards to the LUC 2018 Act and as independently analyzed by the Coalition of Real Estate Investors and Surveyors amount to 400 %? It does not add up.
On his part, looking at the larger picture, the governor knows that if Lagos has to keep pace with its dream of becoming the 3rd largest economy on the African continent, cope with dwindling resources from oil and enjoy relative peace as it beefs up security, increased taxation of those in the upper class, is the best way forward.
That explains the commendation he received from the likes of Dangote and Ovia. Said the former: “I think people should voluntarily be paying their taxes in Lagos” adding that progress being made with the Lagos State Security Trust Fund, LSSATF. As the latter reiterated, many entrepreneurs feel safe conducting their businesses in the city.
They can see what the taxes are being used for, with the fast-paced urban renewal. An appraisal of the construction of 10-lane dual carriage way from the Murtala Airport to Oshodi, the evolving longest bridge at Agege Pen Cinema attest to these. Add these to the soon to unfold Opebi Link bridge to Maryland, the Onikan stadium, the multi-billion Naira Yoruba Cultural Centre and the dualization of the Epe- Ijebu Ode-Itokin road and the massive Lagos Free Trade Zone complete with both the sea and airports and the beautiful picture becomes clearer.
In all, what matters most is facing the reality, harsh as it may seem and dealing with it squarely. What the governor has done is in line with the principle of Pete Hammett, the director, Center for Creative Leadership (CCL). He states that utilizing strategic planning is a vital competency for today’s leaders as they craft a vision for the future.