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Taxpayer’s Perception On Land Use Charge And Property Rating As Sources Of Internally Generated Revenue In Nigeria




Increasing demand for provision of urban and rural infrastructure and other expenditures in Nigeria have dictated government at all levels to raise funds through taxation. Property rating has been one of the main sources of generating revenue for the states and local governments. But the dwindling in federal allocations to states and local governments due to the drop in oil revenue and with the rapid population growth and decrease in the available funds from the federal, states, and the local governments, has influenced many states to adapt the land use charge as a major way of improving their internally generated revenue (IGR). This study examines the perception of rating/land use charge officers, estate surveyors and valuers and taxpayers on property rating and land use charge taxes as a source of generating revenue for local governments. In attaining this, process of inferences was adopted to evaluate the taxes in addition to questionnaires administered on selected rating/land use charge officers, estate surveyors and valuers and the taxpayers within Umuahia/Owerri metropolis. Data collected were subsequently analyzed with descriptive tools such as tables and percentages. It was discovered that land use charge generates more revenue to the local government more than any other sources of generating revenue. The study therefore recommends that the states that are yet to adapt the land use charge tax should embark on it in order to augment their local government revenue.




Property rating according to Ogbuefi (2002) is a direct tax levied on the owner or occupier of a building or undeveloped piece of land. It is a tax on the ownership of property. The rates are based essentially on the size, structure and location of this tax.

The genesis of property rating is from the British who happen to be our colonial masters in the past; it started about six centuries ago in British as a charity organization to assist the poor mainly by monasteries. It was later taken over by the state which later was called the Poor Relief Act in 1601. This allowed for local and state municipalities to rate properties and collect taxes.

Rating law was first introduced in Nigeria by the British in 1915 and came into free with the assessment ordinance on Lagos CAP 154 of May 1915 and since then there have been a lot of amendment. It was there after introduced to the western region through Lagos by the way of assessment ordinance CAP 154 of 1954. It is also believed to have been introduced to some part of the North and East as far back as 1954 and 1955 out in a different way, initially this kind of local government taxation was called “Development Levy” and later “Emir Welfare Levy”. This levy was charge on owners and occupiers of shops, hotels, residential accommodation, offices and private schools etc. This was an arbitrarily fixed and collection was unaccounted for. In modern Nigeria it gained imported with the 1976 local government edict. With the edict place few state of the federation enacted their own laws.

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The creation of more states in Nigeria in 1976 gave rise to new urban centre’s, the rapid growth of which increased the need to finance the provision of public utilities. One of the major sources of finance is oil. The drop in oil revenue as a result of global collapse of oil prices, which was caused by the Niger Delta Militancy and the Boko Haram insurgency, led to a drastic fall in the federal revenue allocation to states and local governments (Onyike 2016). The fund that is generated through property rating in many states and local governments are insufficient to pay salaries and pension or embark on capital project and meet other essential obligation. For these states to meet their obligations, they adapted the land use charge law as an alternative source of revenue.

The Land Use Charge Law is intended to be a Single Property Charge which replaces all other state and local government taxes on real property including taxes like tenement rates, ground rents, neighborhood improvement charges. By the Land Use Charge Law, once the land use charge is imposed upon a property, the rates and charges which were, hitherto payable under the old legislations, will no longer be applicable and due on the same property (Oserogho 2002).

The land use charge is a charge imposed the owner of the property. However, where the owner is not in possession of the property, the land use charge law authorizes the collection authority to appoint the occupier who is usually the tenant, to be assessed with and pay for the tax. The tenant is in turn authorized by the land use charge law to offset such a payment made under the law from monies that may be due from the tenant to the owner of the property. There is thus an indemnity in favor of the tenant/occupier against the owner. How this procedure would work in practice especially in the light of the temperament of the Lagos land owner is awaited.

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Lagos State is the first state in Nigeria to officially adopt the land use charge as a means of generating additional fund to increase her monthly revenue. In 22 June 2001, the Lagos State Government promulgated the land use charge law to replace the old tenement rate. The land use charge is designed to help the government generate additional revenue needed to develop the state in the light of increasing demand for provision of urban and rural infrastructures and other expenditure. As proffered by the Lagos state government the main objective of the law ”is to generate additional revenue needed to develop the state whose population is growing at an alarming rate without any corresponding increase and or improvement in its physical and social infrastructure” (Oserogho 2002).

This single property charge which replaces all other states and local government taxes on real property in Lagos establishes that a Land-based charge is payable on real property situated in Lagos state with each Local Government area empowered to levy and collect the charge for its area of jurisdiction as collecting authority. Many states have turned to a land-based tax, Land Use Charge as a major way to improve their Internally Generated Revenue. Lagos state successfully pioneered this new tax in Nigeria and has clearly benefitted from it.

Subsequently, the various states where the land use charge laws now exist had adapted the Lagos state law in accordance with their own circumstances. Such states include Anambra who passed the law in 2011, Edo in 2012, Abia in 2014, Osun and Kano in 2014(Onyike 2016). Many local governments virtually ignored the land-based taxes, not only because of their fat federal allocation, but also their limited manpower and skills to deal with the taxes. The state on the other hand, had the manpower and know-how to administer the land-based taxes. Land-based taxes in Nigeria currently include, tenement rates, land rates, neighborhood improvement charge and land use charge. The Land Use Charge is a consolidation of all property and land-based rates and charges such as Tenement Rates, Land Rates, and Neighborhood Improvement Charge into a single tax (Onyike 2016).

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There is disparity on the use of land use charge and property rating as a source of internally generated revenue by many states as a result of the challenges in implementation. This research work will examine those factors militating against effective implementation.


The main aim of this study is to examine between the land use charge and property rating as a source of local government revenue with a view to distinguish which is more preferable.

To achieve the above aim the following objectives will have to be pursued;

  1. To examine the differences and similarities between the land use charge and property rating.
  2. To identify the advantages and the disadvantages of land use charge.
  3. To identify the problems militating against effective rating exercise in Nigeria.
  4. To identify the valuation methods of carrying out rating assessment.


This project is a critical attempt to ascertain the similarities and the differences of land use charge law and the pre-existing law as source of generating revenues for local government councils in Nigeria with the view of proffering useful recommendation provided here which will be of great benefit to the local government and as a veritable tools for revenue mobilization to do so in other to achieve the social and economic goals. Other researchers will also find the materials in this project useful as it will serve as a guide for researchers.


FINANCIAL CONSTAINT: Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection.

TIME CONSTRAINT: the researcher will simultaneously engage in the study with other academic work. This consequently will cut down on time devoted for the research work.


For the purpose of this research work, the following research questions were formulated.

  1. Are there any differences between land use charge and property rating?
  2. What is the relationship between the land use charge and the pre-existing law?
  3. What are the advantages and disadvantages of land use charge?
  4. What are the factors militating against effective rating exercise in Nigeria?
  5. What are the valuation methods of carrying out rating assessment?

Pages:  65

Category: Project

Format:  Word & PDF

Chapters: 1-5

Material contains Table of Content, Abstract and References

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