CHAPTER ONE
INTRODUCTION
The creation of more state in Nigeria in 1976 gave rise to new urban
centres, the rapid growth of which increased the need to finance the
provision of public utilities. One of the major sources of finance is
real estate taxation. Property tax reform is one of the alternatives
proposed as a means for raising increased revenue to meet the financial
needs of cities in less developed countries. Property rating is employed
in Nigeria at the local government levels to raise revenues for public
purposes. Rates are levied not on the nation as a whole but on a
particular locality that is deemed ripe for the imposition of rates and
with the consent of parliament. This consent is not given on every
occasion of rate collection. The power is general one, given by statute
without restriction and for all times.
The general lack of interest on the part of the property
ratepayers and the reluctance of some assessment jurisdictions to
disclose information, the property rate administration is often
surrounded in mystery. This centres on the fact that the core of
property tax (rate) administration is the value of each taxpayer’s
property, so that each taxpayer will bear fairly his proportional part
of the overall tax levy. Property owners have a right to know the
approximate, fraction of estimated market value that is being used for
tax (rating) assessment purposes.
If the local government have to exist and to viable as the
third tier of government they must surely need some local revenue in
order stand firmly property rating is the most obvious source of such
revenue. Property rating not only helps in influencing development but
is also the major source of local government revenue used in defraying
the cost of services rendered by local government includes, inter-alia,
parks, burial grounds, registration of marriage, death and birth.
It is important to note that rate is a form of tax, hence
the use of property rate and property tax is interchangeable, although
there is a slight difference between rate and tax, beside that rate is a
form of tax, while in rating the amount of revenue required by a rating
authority is first decided and then distributed among the rate payers
according to a pre-fixed standard in other kind of tax the exact amount
to be generated at the time of imposition is unknown.
1.1 BACKGROUND OF STUDY
From investigation and empirical data on property rating in general
and in Enugu state in particular, one observes a gold mine with proper
handling waiting to be exploited as can seen in Enugu north it is,
therefore the aim of this paper to examine the administration of
property rating in the state, how well informed the rate payers are,
their attitudes, improvement in the system, how well the system has been
paying off, and of course, a critical appraisal of the system.
The purpose of this paper is to study and identify the sources of
local government finance, its problems, methods of property assessment
as provided in some rating laws/Edicts, the impact of control of rent
edict on property assessment, prospects of property rating and make
recommendations not only on how best to expand the local government
financial base with particular reference to property rating system but
also on how best to implement the rating in the country. The purpose
also includes the prospect of site value rating as a means of boosting
the local government finance.
1.2 STATEMENT OF THE PROBLEM
The local government reform law gave the function of rate collection
to the local authorities. The valuation unit in the old Anambra State
was staffed by civil servants. The unit organized tenement rating and
prepared valuation list which were after due procedure sent to the
rating authority to serve demand notices and collect tenement rates.
One of the greatest rating problems in most rating authorities is the
problem of collection. The weak or ineffective administration has
resulted in a high rate of default. For example in 1978/79 in the whole
of Enugu north 21% of the estimated rate revenue was collected. Some
rating authorities are now embarking on a commission basis.
The question of prosecuting defaulters is not actively pursued in most local rating authority areas for two reasons:
(a) Most of the defaulters are the élites who will adjudicate such cases.
(b) For political expediency landlords are political power
brokers who chairmen of local rating authorities would not like to
embarrass by prosecution.
Part xiii of this Edict captioned “Rating” which includes sections
103 to 146 empowers a local government area, in other words, a rating
areas to impose property rating on property owners as a source of
revenue raising. In Enugu state in general, and Enugu North local
government in particular, weaknesses are readily discernible in the
present property rating structures which in retrospect, prevents
successful implementation of their service. Most of the property rating
administrators at the local government headquarters is mere technicians,
others basely literate which in no less measure hamper their sense of
judgments as per the nature of the properties they collect data from, to
be used by the rating valuers in the ministry of local government as
Enugu, to arrive at the annual values of the properties. This problem
was aggravated during the political era when employment opportunities
were nation on political rather than qualification basis.
In collation with this, most property owners in Enugu are illiterates
and do not know their rights. Most of them do not know why they should
pay property rate at all. Added to this ugly situation is the ambiguity
mounted by the assessors (valuation officers) in their notice to the
property owners indicating the assessed value thereof. They only show
the assessed annual value with out signifying the actual rate payable.
When most of landlords see these, they simply deafen their ears, and
blatantly refuse to pay, misconstruing the annual value as the rate
payable value. They are only brought to attention of this premise by
litigation, which is not the best interest of the local government, the
cost and time consummations.
Another factor is how to equate the rating burden of the property
owners in the locality with the value of services provided by the
government activity. Implicit in this problem is the question of how to
improve the current deplorable situation and weakening rural development
programs via sound administration of property rating revenue.
1.3 OBJECTIVES OF THE STUDY
The main objective for the introduction of property rating in the
local government is to raise revenue from the source. Revenue, thus
generated are utilized by the local government where the
tenements/properties are located to provide essential service which the
government grants cannot easily take care of.
Local government provides essential services such as the supply
of water and electricity, repair of wads and bridge, supplementing of
the government grant for the payment of staff salaries not employed by
the government. They also, have the responsibility to provide good
drainage system and the planning of their local government area.
It is a fact that no government could long exist without the power to
levy and collect taxes.(Barlowe.R)goes on to contend that the power to
tax is the one great power upon which the whole national fabric is
based. It is necessary to the existence and prosperity of the nation as
the air he breathes is to the natural man. Thus the taxing power
provides government with the major portion of revenues they use to
finance their many operations and function, and it also provides a tool
they can use for various fiscal and regulatory purposes.
1.4 SCOPE AND LIMITATION OF THE STUDY
This work can not be said to be a comprehensive work. This is because
property rating is so wide a discourse that all its facets could not,
within the time limit and the volume margin, be covered effectively.
Coupled with these constraints aforementioned, the Enugu State North
L.G.A played a vital role in frustrating the researchers endeavours.
Again, the notion of administrators that the documents relating to
property rating were mainly secrets and could not be made available to
researchers unless on government permission met with its own problem.
Further more, reluctance due to ignorance on the purpose of the
research on the part of the property owners to disclose necessary
information on their own parts of the administration was also there.
This was so pronominal that most of them either refused the collection
and filling in of the questionnaires or automatically dodged certain
personal interview question.
Despite all these constraints, and with perseverance and strong
commitments, to the task on hand, the researcher was able to break
through, and gathered adequate data necessary to make objective
deduction and generalization on the property rating administration in
Enugu North Local Government Area, Enugu State.
1.5 DEFINITION OF IMPORTANT TERMS
A) PROPERTY RATING: Also known as local
government value of property paid to local government coffer as an
amount per naira of the dateable value of the property. It is a local
government tax based in rates, which are levied on the basis of ratable
values of properties.
B) RATE: Payment for the ownership or
occupation of something valuable, that is, rate is payment for the
benefit derived or derivable from services.
C) RATEPAYERS: Ratepayers are the
property owners whose properties are ratable. The word may refer to
occupiers of the property or agents of the property owners especially
where the property owners is an absence landlord.
D) RATING AUTHORITY: Means a rating area
or a local government charged with the powers to administer property
rating. Where used in this write-up, it applies to Enugu north local
government.
E) LOCAL GOVERNMENT FINANCE: Is the management of inflows of money by the government, that is the obtaining (of income) and using (or expenditure) of fund.
PROPERTY RATING ADMINISTRATION
Property rating administration embraced the four board
principal arms involved in property rating namely the assessment, the
collection the payment, and the application machineries.
OWNER: Includes the person for the time
being receiving the rent of the tenement in connection with which the
word is used whether in his own account or as agent of, or trustee for
any other person, or who would receive the sum if such tenement were let
to tenant, and the holder of a tenement direct, from the state whether
under lease, license or otherwise.
PROPERTY: The meaning of property varies not
only among individuals but also among professions. T o Estate surveyors
and valuer and in fact in legal sense, property consist not of object
but of rights over or in things owned. In other words, property consists
of rights which owners exercise over land which they posses. These
rights are
(a) Rights of use (b) Right of ahenate
(c) Right to claim title to (d) Right of
assimilate, and (e) Right to pass by succession. These rights are
referred to as “bundle of right” or property power.
RATE NAIRAGE: Means the amount in kobo to be
charged on each naira in the assessed ratable value. It is currently 10k
(ten kobo) in Enugu State.
STATE: State here means Enugu State.
LOCAL GOVERNMENT: “local government” where used in this thesis implies the Enugu North Local Government Area of Enugu State.
APPRAISER: In relation to rating is essentially a valuer appointed to assess the value of hereditaments in the rating authority area.
HEREDITAMENT: Means any land, tenement or
property which are or may become hable to any rate in respect of which
valuation list is by the rating Act made possible. In other words, it is
any tenement included in the variation list.
SPOT VALUE: Means the amount at which a scheduled tenement is ratable.
RATING AREA: Means the area of operation of
any rating authority. Every local government area is by section 99 of
the local government edict made a rating area.