Property tax law for people in FCT

The long-awaited FCT Internal Revenue Bill has been passed by the Senate. The good news is that the assessment and collection of property tax in the FCT will soon be a dream come true following the birth of the new FCT Internal Revenue Board Bill currently awaiting the concurrence of the lower House and presidential assent.

After years of extensive and painstaking deliberations on the pros and cons of the bill by both Houses of the National Assembly, the Senate recently passed it. The bill, which is titled: A Bill for an Act to Provide for the Establishment of Federal Capital Territory Board of Internal Revenue Bill, 2011, aims at providing the legal framework for empowering the FCT Administration in the collection of taxes and other revenues within the FCT to the extent it will not interfere with the jurisdiction and competence of the Federal Inland Revenue Service, FIRS.

An important component of the bill is the FCT Property Tax Bill, 2012, which seeks to provide for the assessment and collection of taxes on real property within FCT by the FCTA and other matters connected therewith. Indeed, section 24 (3) (1) of the bill empowers the FCT Board of Internal Revenue Service to collect taxes that FCT “as a state” can collect in accordance with Section 299 of the 1999 Constitution.

Under the provisions of the bill, the property tax assessment framework will cover commercial, residential, industrial, recreational, government, vacant real properties and other related estates. However, Section 24 (2) grants exemption to properties owned by nonprofit making organizations such as religious bodies, nongovernmental organizations (NGOs), civil society groups, the diplomatic community, public cemeteries, libraries, research institutions, public squares and other designated non-taxable properties within the FCT.

It is necessary at this juncture to put the concept and principles of property tax in perspective in order to appreciate the facts of the matter. A property tax is a compulsory levy imposed by designated authorities (governments) on interests accruing from the ownership of real property including buildings, lands, ownership interests, etc. Such taxes are determined by the current market value of the property and at a given rate. From the UK to the USA, France to UAE (Dubai) and other parts of the world, effective and efficient property tax administration has unlocked amazing opportunities for economic prosperity and global dominance.

Many observers, especially tenants, land owners and investors in real estate business, have expressed reservation over the propriety or otherwise of the new tax bill. For instance, some concerned tenants in the FCT express fear that property tax will increase the rents on houses in Abuja, while some landlords feel they are the primary targets of the proposed law. According to a property investor in Abuja (name withheld), “The new legislation is an indirect means by government to cut their pound of flesh and reap where they did not sow”. Some observers harbour the erroneous impression that the bill is tantamount to usurping the powers of FIRS.

While some of the fears expressed are quite expected, it is interesting to note that governments all over the world have the statutory responsibility of providing basic welfare services for the people as well as promoting the socio-economic and political development of their countries. One of the major sources of revenue for discharging these functions is taxation, with the property tax system forming the lion’s share of such revenue sources, in line with the practice in other states of the federation.

Considering the increasing emergence of uninhabited housing estates and other abandoned properties across the entire landscape of Abuja even amidst biting accommodation problems facing FCT residents, the need for a speedy passage of the Property Tax Bill and the Revenue Tax Bill into law, becomes not only imperative but also expedient for effective tax administration in the FCT. This will enable the administration to channel more funds accruing from property tax, to the construction of more affordable houses for residents.

Ultimately, FCT residents and all men of goodwill should appreciate the good intentions of the FCTA in enacting an enabling property tax law. FCTA on its part should fashion out effective policy framework for transparent and accountable tax collection system that will generate the desired revenue for the development of livable housing for the teaming population of less privileged masses. This is the only way that the confidence of the people can be restored.

Okafor is Head, Public Relations, FCT Legal Services Secretariat, #1 Capital Street, Area 11, Garki, Abuja