Fragmented and leaky legacy systems
The property taxation system in Lagos was a manual and inefficient system with fragmented charges and multiple taxation. The Land Use Charge law was introduced in year 2000 to combine the 3 existing charges into just one charge called the Land Use Charge (LUC). The LUC law required that each property must be enumerated before bills could be issued to the property owner. Before introduction of LUC, each property was billed haphazardly and unpredictably for Ground Rent and Neighborhood Improvement Charge (collected by the state government) and Tenement Rate (collected by the local governments). These charges were arbitrary and corrupt revenue administrators would often overcharge a helpless property owner to force them to pay bribes to bring down the exorbitant charge. As can be seen in the table below, revenue due to the state were perennially low due to these fraudulent practices.
Expected vs Actual Tenement Rate Collection in 2 Lagos Councils (Y2000)
Introducing transparency
Sample property enumeration dataset for a typical property in Lagos
The LUC put an end to this by ensuring a transparent assessment process which enabled the property owner to independently verify what they were charged by doing the calculations themselves with the formulas encoded in the law.
The enumeration process required a visitation to the property to interview the owner and measure the size of the land parcel and the total size and condition of the building. These values were then plugged into a formula to calculate the annual LUC. The enumeration process was aided by vectorized parcel maps developed from up-to-date satellite imagery. The parcel maps depict the individual property boundaries and building footprint.
A 200 sq.m field sheet showing uniquely identified plots and buildings.
Tools and methods
Property taxation is a well developed and automated in many municipalities worldwide with numerous off the shelf and custom softwares being used. The Lagos LUC system was the first automated system in Nigeria at the time.
1. Satellite imagery
2. ESRI ArcGIS software
3. Parcel maps segmented into field sheets
4. Enumeration forms
5. Measuring tape
6. MS Excel, MS Access Server
7. LUC Demand Notices
8. Courier service, delivery notes
Beating expectations
The LUC system generated 300million Naira in the first year of my operation of the restructured system. The system was initially run by Reid-Crowther/LRC but failed due to high bills which did not take affordability into consideration. We adjusted the formula and were able to send out demand notices valued at 1 billion in year one with collections of 300 million without enforcement . The system now generates about 10 billion per annum.