PROPERTY TAX; How much do you know?

Taxes are known to be levies paid by citizens of a community for the services provided such as town halls, markets, roads, electricity e.t.c. The existence of taxes dates way back to the ancient communities where people pay either tribute or sweat tax to the local chiefs. Since the discovery of crude oil in the early 1960’s in Nigeria, the government has depended on it as the main source of revenue thus over looking other sources such as agriculture and taxation.

Of recent the Nigerian government has turned its attention towards intensive revenue generation through taxation; which in other nations proves to be a major source of revenue, and this includes property taxation which is said to be one of the most stable forms of taxation.

According to wiki, a property tax is a levy on property that the owner is required to pay. The tax is levied by the governing authority of the jurisdiction in which the property is located; it may be paid to a national government, a federated state, a county or geographical region, or a municipality.

The Food and Agriculture Organisation (FAO) (2002) defines property tax as an annual tax imposed on real property usually by reference to an advalorem tax base (i.e., the tax is calculated according to the value of the property). Such taxes have been in existence for millennia and their benefits are well known. They are transparent, cheap to administer, efficient to collect and well understood by the taxpaying public. They are administratively feasible in virtually any circumstances and, being locationally fixed, are particularly suitable as a source of locally generated revenue for local governments.

Although the very transparency of a property tax can make it unpopular, well administered property taxes have the potential to generate significant revenue and reduce opportunities for corruption. However reports states that the yields of urban property taxes in developing countries are extremely low, its contribution to total public sector tax revenues is negligible, and its share of municipal revenues is typically less than 30 percent.

Read also: Property Tax in FCT approved by National Assembly

In Nigeria, property taxation has limited revenue potential firstly because the nation places higher priority on oil revenue and secondly because in many cases it has proven difficult to administer. To ensure effective utilisation of property tax policies in Nigeria, the government needs to adopt a vibrant legal and administrative structure that will hasten documentation of land transactions so as to assist the government in implementation towards sound revenue mobilisation for municipal development. The only fully appropriate tax base for local government would appear to be property tax. Since proper and effective administration of property taxation is perceived to contain the potentials of poverty eradication, the proper authority must take more than a casual stride to ensure its success

The rationale for administering property tax is to stop the degeneration of immediate local environments. The
environments where people live should be habitable, comfortable, neat, serviceable, sustainable, and conducive to their survival. It should be free from disease attracting or death causing situations. All services needed for the survival of life and properties should be made available, and such facilities provided should be made present on a regular or predictable basis. The equipment for sustaining or maintaining the facilities should also be made available. The basic services/facilities to be provided include road networks, market places, motor parks, abattoirs, street lights and drainage lines

In most urban centres of Nigeria, facilities are either lacking or have deteriorated beyond repair and the governments are yet to correct these anomalies. Over the years, facilities in most Nigerian cities have degenerated to a great extent. Road networks  have developed potholes and in some areas access roads are lacking. Some parts of the country may lack pipe borne water, insufficient health care centres, and poor drainages among others. Albeit when a source of revenue such as property tax is at the disposal of the state and local government as it is obtainable in Lagos via the Land Use Charge, a lot of the problems facing Nigeria can be taken care of if the tax is implemented and properly administered.