Babatunde Fashola, man of the People

[denker]

Lagosians groan under new tax regimes

Kunle Awosiyan, Lagos - 09.09.2009

THESE are not the best of times for low income earners in Lagos State as the Lagos State government has continued to impose various taxes on the residents. People are gradually relocating to get shelter elsewhere while many have taken their trades to neighbouring villages and towns.

The administration has never pretended that taxation is the main source of its internally generated revenue. In its quest to meet the IGR target, the government had successfully implemented the Land Use Charge, Personal Income Tax and is currently putting finishing touches to the Consumption Tax regime.

The land use charge, which is gradually replacing the tenement rate, which at a time was the main source of revenue generation for local governments in the state, is now a rising bill the residents must pay to stay in the new Lagos city model plan.

The land use charge, according to some residents, has forced many landlords in the state to increase their rents, making it more difficult for tenants to pay for accommodation. Nigerian Tribune findings, indeed, show that a room in the state now costs about N100,000 per year depending on the location.

The argument of the landlords is that the land use charge has doubled what they were paying as tenement rate to the local governments and that the only thing they could do to meet the increase was to, in turn, increase rents. The land use charge is the policy of the state government to tax every property across the state and, in doing so, it has stopped the local government authorities from collecting tenement rate, except in those areas that had not been enumerated by it.

Findings revealed that houses that were paying tenements of about N2,000 are now paying about N10,000 under the land use charge. “This”, as a former Lagos resident, Mr. Kasali Raji, put it, “is enough reason for one to run away from Lagos.”

He said: “What the government does not know is that we, the tenants, suffer from this policy. The landlords will never bother. They have increased my rent twice this year from N80,000 to N100,000 and to N120,000.” He explained that he had to move to Mowe, a suburb of Ogun State, where he got a room for about N40,000.

However, the introduction of taxes in Lagos, it is believed, is not meant to aggravate the suffering of the people but a necessary policy to make people contribute to the developmental goals of the present administration. The state governor, Mr. Babatunde Fashola, had unequivocally said that the taxes would give the residents the power to lay claim to the infrastructure being provided by his administration.

To him, taxation was used by Chief Obafemi Awolowo as a big source of income to provide free education, free health and, of course, good infrastructure, during his days as the Premier of the Western Region. The personal income tax was preceded by sensitisation programmes, with government urging traders and salary earners to be more sensitive to the regulation.

In Lagos, at present, it is not only motorists who lack the vehicle documents that could be arrested but also those who do not have tax clearance. Transit motorists without tax clearance do not ply Lagos roads regularly any more for the fear of losing their vehicles to the Vehicle Inspection Officers (VIOs) or men of the Lagos State Traffic Management Authority (LASTMA).

To a commercial motorcyclist, popularly known as okada, Mr. Blessing, the inability to pay his three years personal income tax had made him to lose its motorcycle to the State Environmental and Special Offences Unit. He told our correspondent that the motorcycle was impounded because he rode in the night but had not been able to get it back because he was asked to pay tax.

He said:

“I’m tired. To do business in Lagos is very hard now. I have to repair my second machine to start business again but I must confess to you that things are not the same again. Maybe, I will have to go back home to do farming.”

-good thought there, my dear!
This tax also affects clerics as they have to give a certain percentage to the government from their earnings. According to Fashola, clerics who earn salaries should pay tax. He said that the government was not asking churches and mosques to pay tax but their workers, including hired priests and imams, to give a percentage of their incomes to the government.

Next to personal income tax is the consumption tax, which generated a heated debate at a stakeholders’ meeting between the government and hoteliers recently. The government had called on operators of hotels and restaurants to support its consumption tax policy but the latter had bluntly refused.

Government had asked for five per cent of consumables in restaurants and hotels, saying that the money would be used to provide infrastructure and better environment for the operators to do business but the policy did not go down well with the operators.

“We will carry our business somewhere else,” one of the hoteliers said. However, in one of his numerous responses to tax issues, the Special Adviser to the Governor on Taxation and Revenue, Mr. Ade Ipaye, had stated that there was no gain without pain, adding that tax payment was introduced to alleviate the suffering of the masses.

He noted that taxation was a flexible regulation imposed on the people to make them responsible for state development. “I expect the hospitality industry to be the one agitating for consumption tax because they are the one that benefit most from government. There is no country that has developed that charges less than 10 per cent consumption tax and if we say that those in Lagos should pay five per cent I think we have been so magnanimous,” he said.

Asked if the government would go ahead to implement the tax, Ipaye said, “yes,” stating that those hoteliers who had sued the government would soon come back to join the policy. “In fact, some of them have begun to register,” he said.