An Assessment of Property Tax Administration in Edo State, Nigeria

By Balogun, Toju F. | The Indonesian Journal of Geography, April 2019 | Go to article overview

An Assessment of Property Tax Administration in Edo State, Nigeria


Balogun, Toju F., The Indonesian Journal of Geography


1.Introduction

The Local Government is expected to generate revenue from within to supplement the federal allocation accruing from petroleum resources. This is particularly required now that the revenue from petroleum has gone down due to the fall in oil price and coupled with the dwindling economy (Oni and Ajani, 2011). Among the sources of internally generated revenue approved (Otubu, 2018) which is equitable, certain, unhidden and can be monitored is property tax (Corker and Nieminen, 2001). Property tax is an important local revenue source that is often underused as a source for financing local expenditures. According to Kelly (2003) property taxes account for about 40-80 percent of local government revenues, except in developing countries where the property tax may generate a maximum of 40 percent of local government revenues. For example, Ghana property tax accounts for about 14% of the total revenues of local assemblies, an average of about 6% of total local revenue in local councils in Sierra Leone, and less than 10% in The Gambia (Fjeldstad, Ali and Goodfellow, 2017) .Thus, the amount generated from this source is very small compared to the potentials of property tax. Although property tax has great potentials yet it is faced with the problem of ineffectiveness and unreliability which seriously limit its ability to generate enough revenue. In particular, weak administration and technical limitation hinder the extent to which local government can tap on an expanding tax base and enforcing compliance to property taxation.

Although the focus of many state governments is currently on property tax, review of property tax administration in various states in Nigeria however shows varying degree of challenges militating against its success as a source of internally generated revenue. For example, Babatunde and Sunday (2008) in a study conducted in Minna, Niger state, observed that the land based taxes levied in the state are stamp duty and business premises registration. They reported that the major problem of property tax in Niger State is lack of political will to support the assessment and collection of property tax. In Akwa Ibom State, Ndehedehe and Kolawole (2012) in their study reported that land administration is carried out using hard copy revenue data either in the form of maps or descriptive documents. There is no documentary evidence of title for up to 80% of the parcels in Akwa Ibom state. Besides, less than 10% of the state is covered by cadastral survey in hard copy form. Out of 23 Local Government Areas of Kaduna State, according to Ishaya, Dabo and Makama (2012), only three have tenement rating units. The reason for this was that the cost of collection of the tenement rates was higher than the revenue generated from the exercise. If the cost of administering the properties becomes higher than the generated income then the rating is uneconomical. Added to this was the corrupt practice of the revenue staff.

In Bauchi state, Muhammad and Ishiaku (2013) identified lack of political will, inadequate records of taxable properties, unpopularity of the tax, inadequacy/ lack of skilled personnel and corrupt practices of officials as the major challenges militating against the success of property tax administration. Added to this was that most taxable properties are owned by the ruling class which made it difficult to effect compliance. Oluwadare and Ojo (2014) in their study in Olorunda Local Government Area of Osun State observe that inadequate knowledge of spatial distribution of properties and the haphazard manner in which the property tax record is kept contributed to the huge amount of revenue being lost by the government. Their study further revealed that only financial institutions are up-to-date in the payment of property tax probably due to the fear of losing customers in case they are prosecuted. The study concluded that government can meet up with its financial obligations by establishing GIS Unit for accurate management of property tax records. …

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