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Land Use Charge: Tax revenue crucial for development

Land Use Charge: Tax revenue crucial for development

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The controversy over the reviewed Land Use Charge in Lagos State seems to have subsided. But what remains unchanged is that Lagos needs revenue to continue to deliver service to the people sustainably. Tax revenue is not only essential, but would enable the state to depend less on borrowed funds and bond issuances in realising its infrastructure, economic empowerment and security goals, writes COLLINS NWEZE.

Tax is a legal instrument used in every society to achieve service delivery. It is a civic responsibility, and incumbent on every taxable individual and organisation to contribute to building the commonwealth.

The recently-reviewed Land Use Charge Law in Lagos State has pitted the government against a section of the people, mostly the organised private sector, with some suggesting that the administration may have lost its goodwill with the citizenry.

Yet, if one must be dispassionate, there is no doubt that the government needs to boost its revenue to continue to deliver service on a sustainable basis.

A Lagos-based tax expert, Seun Olamilekan, said the Lagos State government had mainly relied on borrowed funds and bond issuance to transform the city, which is not sustainable in the long term, because the facilities are interest bearing and must be paid back.

For instance, the recent debt figure released by the Debt Management Office (DMO) showed that Lagos has a domestic debt overhang of N533.6 billion. With federal allocation declining, it is clear that the government must be efficient in its tax revenue drive. For efficiency, effectiveness, and relevance it became expedient to reform the tax system, which the state government is doing.

According to the government, rather than short-term thinking of political gains, it is determined to leave a legacy of prosperity for all and a functional Lagos, one that every resident will be proud of. So, it is ready to do what is right, even at the expense of its political health.

It is unfortunate though that Lagosians have yet to fully appreciate the necessity of tax reforms and the engendering of a progressive tax system. In a show of good faith, however, and in consideration of the economic situation, several reliefs were built into the Land Use Charge law and the state government promised to continue to dialogue with all segments of society to find an agreeable rate. Following extensive dialogue and true to its promise, a further set of reductions to the Land Use Charge were introduced to the tune of 50 per cent for commercial properties.

The Land Use Charge controversy may yet be a long road to travel, but the government’s single-mindedness and integrity may gradually be registering on Lagosians. Only recently, the Nigerian Institution of Estate Surveyors and Valuers (NIESV), Lagos State chapter, which had earlier opposed the law, pledged support for the revised Land Use Charge law.

While Lagosians gradually come to terms with the new Land Use Charge law, they can hardly deny that the Ambode government has done well and would need to be supported through the exercise of their civic responsibility of tax payment if the Lagos of everybody’s dream must be achieved now and not tomorrow, because, really, tomorrow never comes.

Governor Akinwunmi Ambode was faced with fixing the inefficient tax system in the state, which could be wrongly interpreted by the populace, thereby jeopardising his political future or consolidating his political goodwill by pretending all was well with the clearly obsolete and inefficient tax system. The governor chose the harder and rougher road towards consolidating his legacy.

Olamilekan said the state government has over the past three years managed to build an unusual rapport with the people.

“Unusual because what has, unfortunately, become the norm rather than being the exception is that there is often a wide chasm separating the governed from the government. As a result, many governments, whether federal, state or local, struggle to gain the sympathy and trust of citizens, which makes policy implementation and other government initiatives sometimes difficult to achieve or appreciate,” he said.

According to him, the Ambode-led government, it would seem, has managed to bridge that invisible but ever present disconnect between the ruled and the ruler in the country. Such trust is no doubt built on noticeable and people-friendly policies and initiatives, which is not in short supply in the Ambode administration. Coupled with the mass-oriented developmental agenda of the administration is a commendable predisposition to empathise with and listen to the people and draw insights with which to further develop the state and make it livable for residents.

The administration had stated it planned to focus attention on infrastructure, economic empowerment, and security. And so far, it has covered much ground in the delivery of value in these areas.

Analysts said housing remains a huge challenge in Lagos; the housing deficit is put at 2.5 million units. To address this, the government embarked on massive construction of affordable housing estates. More than 27 low- to mid-income housing estates are under construction/redevelopment or completed and assigned across the state in Mushin, Oko-Oba, Igbogbo, Ojo/Igando, Lekki, Sangotedo, Ikota, Ojokoro, Ogba, etc. Often, such housing schemes are hijacked and acquired by speculators and real estate investors, which effectively defeats their purpose.

As part of its economic empowerment commitments, the government budgets N6.25 billion yearly to its N25 billion Lagos State Employment Trust Fund, targeted at supporting about 100,000 micro, small and medium enterprises and creating at least 300,000 direct and 600,000 indirect jobs by 2019. So far, more than 5,893 businesses have been given about N5 billion. This year, over N700 million has been approved for 1,753 beneficiaries.

Perhaps the most noticeable and appreciated intervention of the Ambode administration has been its road infrastructure projects because that affect all strata of society. Commuting in Lagos in the past was very challenging. Commuters spent an average of four hours in traffic daily on most routes due to bad roads, poor road networks/management, and inadequate alternate routes, among others. That had serious implications for productivity and the well-being of Lagosians. But through road expansions and maintenance, opening up of alternate routes, construction of lay-bys, bus stops, interchanges, and pedestrian bridges, commuting within the metropolis has improved tremendously.

In demonstration of strategic thinking, usually associated with the private sector, the Ambode administration, determined to boost food production in the state, collaborated with the Kebbi State government to produce and market food items such as rice, sorghum, wheat, groundnut, and livestock at subsidised rates, starting with rice.

Expectedly, people have warmed to the administration and it has enjoyed tremendous goodwill among the residents and even outsiders. Last year, the Federal House of Representatives Committee on Basic Education and other Services, led by its Chairman, Zakari Muhammed, on tour of projects executed under the State Universal Basic Education Projects (SUBEB) across the country, lauded the government for “embarking on schools infrastructure projects that are impacting positively on the delivery of quality education in the state,” and expressed satisfaction with the “quality of materials used in most of the schools visited.”

The post Land Use Charge: Tax revenue crucial for development appeared first on The Nation Nigeria.

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