FCT’s overdue internal revenue board

The Bill provides for the establishment of a statutory framework for marshalling the internal revenue generating options available to the Federal Capital Territory (FCT) administration to facilitate its obligations to the ever-growing population of the nation’s capital city. While the FCT is originally envisaged to be a self-governing entity with the periodic election of a mayor, […]

The Bill provides for the establishment of a statutory framework for marshalling the internal revenue generating options available to the Federal Capital Territory (FCT) administration to facilitate its obligations to the ever-growing population of the nation’s capital city.
 While the FCT is originally envisaged to be a self-governing entity with the periodic election of a mayor, the National Assembly has in practice been making appropriations for its annual expenditure estimates.  This year, the FCT budget is over 271 billion naira.  The FCT administration also generates some revenue through levies and taxes, which in most cases are ad-hoc and lack legal backing. The proposed board, which would be the first since the FCT was created in 1976, is expected to address some of these operational lacunae.
 One of the legislation’s key provisions is the establishment of an Internal Revenue Service for the FCT. According to Section 8, the Bill gives the IRS powers to “adopt measures to identify, trace, freeze, confiscate or seize the proceeds of tax fraud or evasion.”  Officials believe that as much as 100 billion could be generated annually by the IRS.
The inclusion of property taxes in the new Bill under Section 24 is appropriate, given the scope of abuse in property management in the FCT. This tax is distinguished from tenement rate, which is paid on occupied property. Property tax is based on classification of such assets as the land on itself or with the improvements on it, such as buildings or other appurtenances, or both. In some countries, the property rate for unoccupied assets is often higher for the occupied ones. This provision should address the obnoxious practice of acquiring and retaining land purely for speculative reasons.
Even though belated, the proposed board would be a positive development. Indeed the question is why it took the authorities so long in introducing it, given the promise it has for streamlining the terribly chaotic and corruption-ridden property sector of the territory. The FCT from inception has had no property law. Payments on property have been based on the arbitrary assessments made by the Abuja Geographical Information Service (AGIS).
By virtue of its status as the nation’s capital, the co-location of all organs of the federal government, as well as other complementary organisations, coupled with  the problem of rural – urban drift in the country- have cumulatively  had a negative effect on the development of the FCT. An ever increasing mixed base of clientele troops into it, seeking greener pastures. As a consequence, the demand for varieties of accommodation has been on the rise, while the taxation regime that would sustain due benefits of revenue to the government as well as its capacity to perform basic functions, has been static or in decline, with federal budgetary allocations providing the bulk of its financial wherewithal.
In the dubious environment that obtains in the property sector in the FCT, the reign of sharp practices holds sway. Property development assumed a new and dangerous dimension with investments of questionable utility to society springing up in odd locations.  Meanwhile, an adjunct market for land speculators has flourished as a result, while ample operating space has guaranteed good business for quacks, swindlers and all manner of undesirable operators.
The new law should capture and address all of these challenges, which can only be realized if the implementation enjoys the commitment of the FCT administration to eschew the corrupt practices that some of its officials are allegedly involved in.
The House of Representatives should hasten its action on the legislation for it to become law without further delay.