Property tax in Abuja

With the passing of the Federal Capital Territory (FCT) Internal Revenue Board Bill 2014 which introduces property tax in the capital territory, those bothered with the matter are asking questions…Will it take away the high premium on Abuja property? Can it stop land speculation? Can the tax end money laundering in Abuja?The Senate last Tuesday […]

With the passing of the Federal Capital Territory (FCT) Internal Revenue Board Bill 2014 which introduces property tax in the capital territory, those bothered with the matter are asking questions…Will it take away the high premium on Abuja property? Can it stop land speculation? Can the tax end money laundering in Abuja?
The Senate last Tuesday passed the Federal Capital Territory (FCT) Internal Revenue Board Bill 2014, introducing property tax in the capital territory.
Property tax is imposed on interests in real property — land, buildings and permanent improvements that are considered under state law to be ownership interests. The tax is computed as the determined market value, times an assessment ratio, times the tax rate. The rate of assessment shows that taxable property in Abuja will be like this: (a) Residential-0.1 percent; (b) Commercial-0.2 percent; (c) Recreational-0.1 percent; (d) Government and governmental agencies-0.1 percent and (e) Others-0.3 percent. Property owned by religious organizations are exempted.
The bill will be sent to the House of Representatives for concurrence then forwarded to the president for assent. When it becomes law, government will generate much revenue. It is estimated that FCT administration will generate about N100 billion from the tax. The FCT Board of Internal Revenue is charged with the responsibility of harnessing the Internally Generated Revenue (IGR) of the territory.
Senator Smart Adeyemi who is chairman of Senate Committee on FCT, the committee that processed the bill said, “With the coming of the board in place, the FCT will be able to generate revenue internally and that will help to augment what is coming from the federation account. The new legislation is the first of its kind since the creation of the nation’s capital in 1976. The new legislation was first introduced in 2011.
Why property tax
The general belief has been that it is due to lack of tax that developers leave their property fallow. Government’s feeling is that with tax, many will be forced to develop their undeveloped plots and bring down premium on their property. It is also said that many public officials together with their associates steal huge public funds and launder them in Abuja since moving money outside the shores of Nigeria is increasingly becoming difficult. Serving governors in Nigeria have suffered negative consequences of taking too much money across borders.
Minister of FCT Bala Mohammed while speaking with Executive Chairman of Economic and Financial Crimes Commission (EFCC) in his office in January specifically called for deliberate action towards stopping money laundering in Abuja.
The minister had last year decried the spate of corruption in the land administration and involvement of some officials of the administration especially those in the Abuja Geographic Information System (AGIS).
According to him, “People steal money from all over the country and launder or conceal it in buying property in Abuja.” Mohammed lamented that such property owners have refused to come forward for Deeds of Assignment to ascertain the original ownership.
In whose interest?
An estate agent, Mr Udosen Imoette of Country Home, Abuja maintained that when passed into law, property tax will serve government but definitely not consumers. According to him, as the property owner pays the tax, he passes it onto the tenant directly. “Already, there’re multiple taxes – withholding tax, tenement rates and others so the ordinary person will shoulder the additional burden,” Imoette said.  
On whether this will lead to reduction in cost of renting or leasing or buying property in Abuja, the estate agent said, “It will not matter to them [property owners]. These people have the money. They don’t care whether the houses are just there. There’s a property for sale for N450 million in Maitama – for years, it has been there. Of course, there’re those who genuinely build for business.”
The Programme Coordinator, Abuja Housing Show, Mr Festus Adebayo reacted this way, “There was no tax, yet property prices were high. Now with tax, they will be higher.”
Those who spoke with Daily Trust expressed concern that state governments will copy this move and introduce property tax in their jurisdictions. Actually, property tax is taken in many parts of the word. In the US for instance, most local governments impose it as a principal source of revenue. Values are determined by local officials.
Also in Nigeria, with the crave for more revenue, many state administrations have considered shoring up their IGR through land tax. This has made states to resort to use of what is called geo-spatial system which is a modern mapping system. Through this process, some states have captured greater part of their land and take good revenue from it.
Lagos which is fully and properly mapped has been generating huge revenue based on information on geo-spatial observation. Cross River, Nasarawa, Anambra, Enugu, Ogun, Delta and Kano states are mapping using their respective surveying offices.
By the time the bill is accented to by the president and it comes into force, answers to the questions above will emerge.