AN EXAMINATION OF CONSTRAINTS TO EFFECTIVE TENEMENT RATE ADMINISTRATION IN ABUJA MUNICIPAL AREA COUNCIL

AN EXAMINATION OF CONSTRAINTS TO EFFECTIVE TENEMENT RATE ADMINISTRATION IN ABUJA MUNICIPAL AREA COUNCIL

ABSTRACT

Tenement rate is generally a tax imposed by municipalities upon owners of real property within their jurisdiction based on the value of such property. This form of tax is reported to be one of the most stable sources of revenue to governments, however most state and local governments in Nigeria are yet to tap revenue from this form of tax. Revenue generated from this tax is used to provide basic amenities to the people. This research aimed at examining the constraints to effective tenement rate administration in Abuja Municipal Area Council. The data for the research was collected from the staff of AMAC and owner/occupier in the study area by conducting interview and the simple random sampling techniques was used in the administration of questionnaire. The data was analyzed through the use of percentage. Among the problems identified that militate against effective tenement rate administration are lack of publicity, imprecise street numbering and absence of enforcement machinery. Possible recommendations were made like educating the public on the importance of rating exercise, enforcement tribunal should be instituted to deal with cases ranging from default in rate paying and government should conduct proper survey in order to update some street names/numbers to enhance accessibility and identification of properties for effective rate administration.

CHAPTER ONE

1.0 INTRODUCTION

Tenement rate which is a form of tax chargeable by government was defined as “a tax imposed by municipalities upon owners of real property” (Wikipedia 2008). The food and agriculture organization (FAO) (2002) defines tenement rate as an annual advalorem tax base (i.e. the tax is calculated according to the value of the property). Such taxes have been in existence for centuries and their benefits are well known. They are transparent, cheap to administer, efficient to collect and well understood by the rate paying public. They are administratively feasible in virtually any circumstances and being locationally fixed are particularly suitable as a source of locally generated revenue for local governments. Although the very transparency of a tenement rate can make it unpopular, well administered tenements rates have the potential to generate significant revenue and reduce opportunities for corruption. Tomori (N.D) however reports that at present, yields of urban property taxes in developing countries are extremely low. Its contribution to total public sector tax revenues is negligible and its share of municipal revenue is typically less than 30 percent.

In Nigeria, tenement rating has limited revenue potential, firstly because the nation places higher priority on oil revenue and secondly because in many cases it has proven difficult to administer. To ensure effective utilization of tenement rate policies in Nigeria, the government needs to adopt a vibrant legal and administrative structure that will hasten documentation of land transactions so as to assist the government in implementation towards sound revenue mobilization for municipal development. The only fully appreciated tax base for local government world appear to be tenement rate. Since proper and effective administration of poverty eradication, the proper authority must take more than a casual stride to ensure its success (Aliyu 2008).

The rationale for administering tenement rate is to stop the degeneration of immediate local environments. The environments where people should be habitable, comfortable, neat, serviceable, sustainable and conducive to their survival. It should be free from disease attracting death causing situations.

All services needed for the survival of life and properties should be made available, and such facilities provided should be made present on a regular or predictable basis. The equipment for sustaining or maintaining the facilities should be made available. The basic services/facilities to be provided include road networks, market places, motor parks, abattoirs, street lights and drainage lines (Oyegbile 1996).

In most urban centre of Nigeria, facilities are either lacking or have deteriorated beyond repair and governments are yet to correct these anomalies.

1.1     STATEMENT OF PROBLEM

Over the years, facilities in Abuja Area Councils have degenerated to a great extent. Road networks in some parts have developed potholes and in some areas access roads are lacking. Some area councils lack pipe borne water, insufficient health care centers and poor drainage among others. With a source of revenue such as this at the disposal of the capital territory and the municipal authority, a lot of these problems facing the Area Councils can be taken care of if tenement rate is effectively administered and collected. To this end, the research seeks to unravel the reason why tenement rating is not being effectively administered and utilized in Nigerian local government.

 1.2     AIM AND OBJECTIVES

The aim of this project is to examine the constraints to effective tenement rating administration in Abuja Municipal Area Council. In order to achieve the above aim, the following objectives shall be pursued:

1. To examine the types of property in the study area that are taxed or not taxed.
2. To study and analyse the system of tenement rate assessment and collection in the study area.
3. To identify the problems inherent in tenement rate administration in the study area
4. To make necessary and reasonable recommendations on ways of solving the identified problems.

1.3     RESEARCH QUESTIONS

The questions which this project seeks to answer in respect of tenement rate collection in AMAC are;

1. What are the types of property that are taxed or not taxed in the study area?
2. What system of tenement rate administration is used in the study area?
3. What are the inherent problems in tenement rate administration in the study area?

 1.4     SIGNIFICANCE OF THE STUDY

This project is an attempt to examine the constraints to effective rate administration.  It will help rating authorities to know the problems encountered in rating exercise and thereby taking necessary actions to enhance efficient and effective rating exercise. It will also serve as a reference material for subsequent researcher.

1.5     SCOPE AND LIMITATIONS OF THE STUDY

The scope would be restricted to Area II Garki Abuja to enhance effective coverage.

There are several constraints encountered during the preparation of this research. These constraints include: non availability of adequate data played a major limitation to this write up because of non-cooperative attitude of some occupiers who were willing to give information and data needed to aid findings, time factor to extend the study fully in order to make detailed investigation of all the aspects of the study was a constraint too, and the general unwillingness of some respondents to fill the questionnaire provided for the research made it difficult tog gather data needed for this research study at the most appropriate time.

1.6     DEFINITION OF TERMS

Tenement rate: Tenement rate is a charge levied on the occupier of a property for the provision of improvement and infrastructural facilities within a given area and it is levied on Nairage basis of the assessed  value (Oyegbile 1996).

Rate: It is the payment for the ownership or occupation of something valuable, that is, rate is the payment for the benefit derived or derivable from services.

Rate Payers: These are the property owners or occupier as case may be whose properties are ratable.

Rating Authority: This is the government entity into whose hands the issue of tenement rating administration and collection is entrusted by the enabling law.

Rating Area: It is the area of operation of any rating authority.

1.7     HISTORICAL BACKGROUND OF ABUJA MUNICIPAL AREA COUNCILS

The Abuja Municipal Area Council be discussed without cross reference to the concept of Abuja itself. Abuja was created by Decree No 6 of 1976. The idea which was conceived as at 9th August, 1975 was occasioned by the need to decongest Lagos which had become too compacted and over populated to continue to discharge its dual function as a commercial centre and as the nations capital city.

There was the need to also find a central point accessible to all Nigerians within the geographic area and at the same time reduce the vulnerability of Lagos as easy target in the event of any external aggression due to its close proximity to the Atlantic Ocean.

On February 3^rd, consequent on the recommendations of the Justice Aguda panel, Abuja was declared the new capital of the Federal Republic of Nigeria. It covers a land area of about 8000km2 and lying at an attitude 8⁰ 25¹ and 7⁰ 20¹ North and was exercised from the states of Kwara, Niger and Plateau. In order to facilitate rapid development to pave way for eventual movement of the Federal Government to the city, the Federal Capital Development Authority (FCDA) was established in accordance with the same enabling decree No 6 of 1976. In line with the provisions of section (4) (1) paragraph (c) and (d) of Degree No 6 of February 4^th 1976, the Federal Capital Development Authority is to serve as an administrative organ of the Federal Government with the status of a state, thus the existence of council areas. Abuja municipal Area Council is one of the 6 local governments carved out of Abuja.

GEOGRAPHICAL LOCATION

Within the new capital territory, the districts constituting the Municipal Area Council are characterized with lowland and highland:

• The Hills
• The Plains

          The plains are Gwagwa, Kau, Iku-Gurar and Roso-Afara

 The his are Abuja, Zuma, Bwari, Aso, Zango-kuku, Karu, Agwai and      Kwalara-Rubochi.

Elevations range from 550m to 760m on the highest point or plain (Kav) to 120m to 245m on the lowest (1Kv-Guarara) with a slope average of about 6%. Soils are deep and fairly well drained, made up of sandy, clay loam to clay loam on smaller hills and thin stormy sands on steep hills. Part savannah dominates the landscape of these plains into parches of light forest and wood varying in intensity and composition. The hills have much varying topography.

Abuja Municipal Area Council lies between latitude 9⁰ 13¹ an 8⁰ 10¹ North of the equator and longitude 7⁰ 35¹ and 5⁰ 25¹ East of Greenwich (Abuja the Nation’s New Capital, a publication of department of information Abuja 1995). The council has it secretariat at zone 2 Wuse District along Obasanjo way, west wards and sultan Abubakar way east wards. The council has a population of 776,298 (2006 population census) and bounded by Bwari local government area to the north, Mararaba local government of Nasarawa state to the east and Kuje local government to the south.