CHAPTER ONE

INTRODUCTION

The
creation of more state in Nigeria in 1976 gave rise to new urban centres, the
rapid growth of which increased the need to finance the provision of public
utilities. One of the major sources of finance is real estate taxation.
Property tax reform is one of the alternatives proposed as a means for raising
increased revenue to meet the financial needs of cities in less developed
countries. Property rating is employed in Nigeria at the local government
levels to raise revenues for public purposes. Rates are levied not on the
nation as a whole but on a particular locality that is deemed ripe for the
imposition of rates and with the consent of parliament. This consent is not
given on every occasion of rate collection. The power is general one, given by
statute without restriction and for all times.

          The general lack of interest on the
part of the property ratepayers and the reluctance of some assessment
jurisdictions to disclose information, the property rate administration is
often surrounded in mystery. This centres on the fact that the core of property
tax (rate) administration is the value of each taxpayer’s property, so that
each taxpayer will bear fairly his proportional part of the overall tax levy.
Property owners have a right to know the approximate, fraction of estimated
market value that is being used for tax (rating) assessment purposes.

          If the local government have to exist
and to viable as the third tier of government they must surely need some local
revenue in order stand firmly property rating is the most obvious source of
such revenue. Property rating not only helps in influencing development but is
also the major source of local government revenue used in defraying the cost of
services rendered by local government includes, inter-alia, parks, burial
grounds, registration of marriage, death and birth.

          It is important to note that rate is a
form of tax, hence the use of property rate and property tax is
interchangeable, although there is a slight difference between rate and tax,
beside that rate is a form of tax, while in rating the amount of revenue
required by a rating authority is first decided and then distributed among the
rate payers according to a pre-fixed standard in other kind of tax the exact
amount to be generated at the time of imposition is unknown.

1.1              
BACKGROUND OF STUDY

From
investigation and empirical data on property rating in general and in Enugu
state in particular, one observes a gold mine with proper handling waiting to
be exploited as can seen in Enugu north it is, therefore the aim of this paper
to examine the administration of property rating in the state, how well
informed the rate payers are, their attitudes, improvement in the system, how
well the system has been paying off, and of course, a critical appraisal of the
system.

The
purpose of this paper is to study and identify the sources of local government
finance, its problems, methods of property assessment as provided in some
rating laws/Edicts, the impact of control of rent edict on property assessment,
prospects of property rating and make recommendations not only on how best to
expand the local government financial base with particular reference to
property rating system but also on how best to implement the rating in the
country. The purpose also includes the prospect of site value rating as a means
of boosting the local government finance.

1.2              
STATEMENT OF THE PROBLEM

The
local government reform law gave the function of rate collection to the local
authorities. The valuation unit in the old Anambra State was staffed by civil
servants. The unit organized tenement rating and prepared valuation list which
were after due procedure sent to the rating authority to serve demand notices
and collect tenement rates.

One
of the greatest rating problems in most rating authorities is the problem of
collection. The weak or ineffective administration has resulted in a high rate
of default. For example in 1978/79 in the whole of Enugu north 21% of the
estimated rate revenue was collected. Some rating authorities are now embarking
on a commission basis.

The
question of prosecuting defaulters is not actively pursued in most local rating
authority areas for two reasons:

(a)      Most of the defaulters are the
élites who will adjudicate such cases.

(b)      For political expediency
landlords are political power brokers who chairmen of local rating authorities
would not like to embarrass by prosecution.

Part
xiii of this Edict captioned “Rating” which includes sections 103 to 146
empowers a local government area, in other words, a rating areas to impose
property rating on property owners as a source of revenue raising. In Enugu
state in general, and Enugu North local government in particular, weaknesses
are readily discernible in the present property rating structures which in
retrospect, prevents successful implementation of their service. Most of the
property rating administrators at the local government headquarters is mere
technicians, others basely literate which in no less measure hamper their sense
of judgments as per the nature of the properties they collect data from, to be
used by the rating valuers in the ministry of local government as Enugu, to
arrive at the annual values of the properties. This problem was aggravated
during the political era when employment opportunities were nation on political
rather than qualification basis.

In
collation with this, most property owners in Enugu are illiterates and do not
know their rights.  Most of them do not
know why they should pay property rate at all. Added to this ugly situation is
the ambiguity mounted by the assessors (valuation officers) in their notice to
the property owners indicating the assessed value thereof. They only show the
assessed annual value with out signifying the actual rate payable. When most of
landlords see these, they simply deafen their ears, and blatantly refuse to
pay, misconstruing the annual value as the rate payable value. They are only
brought to attention of this premise by litigation, which is not the best
interest of the local government, the cost and time consummations.

Another
factor is how to equate the rating burden of the property owners in the locality
with the value of services provided by the government activity. Implicit in
this problem is the question of how to improve the current deplorable situation
and weakening rural development programs via sound administration of property
rating revenue.    

1.3     OBJECTIVES OF THE STUDY           

The
main objective for the introduction of property rating in the local government
is to raise revenue from the source. Revenue, thus generated are utilized by
the local government where the tenements/properties are located to provide
essential service which the government grants cannot easily take care of.

      Local government provides essential
services such as the supply of water and electricity, repair of wads and
bridge, supplementing of the government grant for the payment of staff salaries
not employed by the government. They also, have the responsibility to provide
good drainage system and the planning of their local government area.

It
is a fact that no government could long exist without the power to levy and
collect taxes.(Barlowe.R)goes on to contend that the power to tax is the one
great power upon which the whole national fabric is based. It is necessary to
the existence and prosperity of the nation as the air he breathes is to the
natural man. Thus the taxing power provides government with the major portion
of revenues they use to finance their many operations and function, and it also
provides a tool they can use for various fiscal and regulatory purposes.

1.4     SCOPE AND LIMITATION OF THE STUDY

This
work can not be said to be a comprehensive work. This is because property
rating is so wide a discourse that all its facets could not, within the time
limit and the volume margin, be covered effectively.

Coupled
with these constraints aforementioned, the Enugu State North L.G.A played a
vital role in frustrating the researchers endeavours. Again, the notion of
administrators that the documents relating to property rating were mainly
secrets and could not be made available to researchers unless on government
permission met with its own problem.

Further
more, reluctance due to ignorance on the purpose of the research on the part of
the property owners to disclose necessary information on their own parts of the
administration was also there. This was so pronominal that most of them either
refused the collection and filling in of the questionnaires or automatically
dodged certain personal interview question.

Despite
all these constraints, and with perseverance and strong commitments, to the
task on hand, the researcher was able to break through, and gathered adequate
data necessary to make objective deduction and generalization on the property
rating administration in Enugu North Local Government Area, Enugu State.

1.5           
DEFINITION OF IMPORTANT TERMS

A)      PROPERTY RATING:         Also known as local government
value of property paid to local government coffer as an amount per naira of the
dateable value of the property. It is a local government tax based in rates,
which are levied on the basis of ratable values of properties.

B)      RATE:       Payment for the ownership or
occupation of something valuable, that is, rate is payment for the benefit
derived or derivable from services.

C)      RATEPAYERS:          Ratepayers
are the property owners whose properties are ratable. The word may refer to
occupiers of the property or agents of the 
property owners especially where the property owners is an absence
landlord.

D)      RATING AUTHORITY:       Means a rating area or a local
government charged with the powers to administer property rating. Where used in
this write-up, it applies to Enugu north local government.

E)      LOCAL GOVERNMENT FINANCE:              Is the management of inflows of
money by the government, that is the obtaining (of income) and using (or
expenditure) of fund.

PROPERTY RATING ADMINISTRATION

          Property rating administration
embraced the four board principal arms involved in property rating namely the
assessment, the collection the payment, and the application machineries.  

OWNER:             Includes
the person for the time being receiving the rent of the tenement in connection
with which  the word is used whether in
his own account or as agent of, or trustee for any other person, or who would
receive the sum if such tenement were let to tenant, and the holder of a tenement
direct, from the state whether under lease, license or otherwise.

PROPERTY:       The
meaning of property varies not only among individuals but also among
professions. T o Estate surveyors and valuer and in fact in legal sense,
property consist not of object but of rights over or in things owned. In other
words, property consists of rights which owners exercise over land which they
posses. These rights are

(a)     Rights of use                  (b)     Right
of ahenate

(c)      Right to claim title to               (d)     Right of assimilate, and (e)      Right
to pass by succession. These rights are
referred to as “bundle of right” or 
property power.

RATE NAIRAGE:       Means
the amount in kobo to be charged on each naira in the assessed ratable value.
It is currently 10k (ten kobo) in Enugu State.

STATE:     State
here means Enugu State.

LOCAL GOVERNMENT:   “local
government” where used in this thesis implies the Enugu North Local Government
Area of Enugu State.

APPRAISER:      In
relation to rating is essentially a valuer appointed to assess the value of
hereditaments in the rating authority area.

HEREDITAMENT:     Means
any land, tenement or property which are or may become hable to any rate in
respect of which valuation list is by the rating Act made possible. In other
words, it is any tenement included in the variation list.

SPOT VALUE:             Means the amount at which a scheduled tenement is
ratable.

RATING AREA:Means
the area of operation of any rating authority. Every local government area is
by section 99 of the local government edict made a rating area.