Low Performance of Tenement Rating As a Source of Local Revenue in Nigeria: A Case for Introduction of Property and Land Use Charge

Abstract

The 1999 constitution of federal republic of Nigeria in its fourth schedule 1(j), assigned local government councils in Nigeria exclusive function to assess privately owned houses or tenements for the purpose of levying tenement (property) rates which becomes a source of revenue for the local government councils. Over time, revenue accruing from this major and reliable source of internally generated revenue (IGR) for local government council has continued to dwindle and in some cases nothing is generated due to inefficient and the ineffective method of tenement rating administration in Nigeria. State governments faced with paucity of statutory revenue allocation from the federation account due to fall in the global oil prices, and realizing the huge potentials of landed property taxation as an alternative source of revenue, are now enacting laws to introduce what they called property and land use charge to replace tenement rate, since local government councils are unable to efficiently and effectively administer it. This paper examines the issues responsible for the low performance of tenement rating as a source of local revenue in Nigeria and prescribes measures towards achieving efficiency and effectiveness in the property and land use charge administration. The paper recommends among others that the method of assessment must be certain and the payer knows in advance his charge (tax) liability.