THE EFFECT OF TAXATION POLICIES ON THE PROPERTY MARKET TRANSACTION IN MINNA, NIGER STATE

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THE EFFECT OF TAXATION POLICIES ON THE PROPERTY MARKET TRANSACTION IN MINNA, NIGER STATE

ABSTRACT

Increasing demand for urban and rural infrastructures and dwindling revenue allocations in Nigeria have informed the Niger State Government to promulgate Land Use Charge Law (2001) as a way of increasing internally-generated revenues through property tax. The Law stipulates a formula for assessing the Charge payable on properties in Lagos State, amongst other provisions. The aim of this study is to determine the effect of taxation policy on property market transaction in Minna Niger State which is one of the thematic areas of Vision 20:2020 for Nigeria. A process of inferences was adopted to evaluate the law in addition to questionnaires administered on Estate Surveyors and Valuers within Minna metropolis. The study found that the formula is inappropriate and that high tax and penalties may discourage investment in new housing and maintenance of existing stock. It therefore recommended a review of the Law and in addition suggested an appropriate basis of fair and equitable tax such that the goal of Vision 2020 is realizable.

CHAPTER ONE

INTRODUCTION

1. Background Of The Study

Property market which can otherwise be called real estate market is defined as any medium where “bundle or clusters of right” are being exchanged. It could also be a system of transaction between land owners, land users and estate agents. It is the sum total of all other smaller and longer markets operating in different types of interest in land. (Olajide, 2012). Real estate transaction can be regarded as the next significant aspect of national development as it forms the physical structure of a nation which the extend and standard of a nation’s development is based (kuya, 2003).prior to the emergency of modern urban development, the traditional African society has been used to the system of ten payment, except that the mode varies from time to time. (Kuya, 2003).

Taxation generally is one of the principle fiscal tools often used by the government at all levels (local, state and national). This government taxing power also provides one of the principal sources of revenue for the finance of public functions. Land and man-made improvements on it has always been subjected to various types of taxes chief of which are tenement rate, capital transfer tax, capital gain tax, probate fee, withholding tax among others(Adegoke, 2003). In its first form, contribution of labor was regarded as “sweat tax” while compulsory contributions from farm produce based on the value of land was regarded as “property  tax” and these taxes are used for the maintenance of markets, roads, chiefs palaces, and other public places. Taxes are now in monetary form and can be collected and used for the provision and maintenance of public goods and services. The taxation of land and buildings has undoubtedly been a good source of income which federal, state and local government in Nigeria and other countries have tried to explore over the years.

Different laws and decrees have been used in the past to back up the legal collection of different taxes on landed property. The focus of this research therefore is to examine these taxation policies (laws and decrees) as it affects transactions on land and landed properties. 

1.2       Statements Of The Problem

The market mechanism of landed property ensures the allocation of land to users and uses. There is the need to introduce orderliness and ensure that publicly desirable uses, which would have been otherwise hedged out by competitions, are able to secure site. These and other factors make the intervention by government in the land allocation mechanism imperative.

Government at all levels over the years have been attempt to regulate property market in different ways such as Land use zoning, sub-division regulation, building codes, power of eminent Domain police power measures and the power of taxation. The problem therefore is that there is no certainty as to what extent does taxation policies affect property market. Required to finance the deficit, Home price and rents on the other hand, have grown ahead         of general inflation making matters worse the composition of homes for sale and rent on t    he market has been inexorably shifting towards very expensive homes.

            Also Kabir and Bustani Ibid state that current scheme include a “site & Service” that        provides low-income beneficiaries with serviced plots including tenure Security and help            to build their own houses and the second approach helped house-owners in existing     squatter area obtain tenure to their land and to improve their dwelling. In spite of the fact that they may help to improve tenure security, these initiate target population low-income             earners usually does not benefit from them. Hence, this study is necessitated to assess the             effect of taxation policies on the property market operation in Minna, Niger state with the             view of point out the impact of these policies in the area to serve as a guideline blue-print   and working document for other areas.

1.3       Aim and Objectives of the Study

1.3.1    Aim

            The aim of this research work is to assess the effect of taxation policies on the property     market transaction in Minna.

1.3.2    Objectives

            To achieve the above stated aim, the following objectives are set:

1. To identify the various taxation policies of government policies in Miinna, Niger state.
2. To identify the property market transactions that are prevalent in the study area.
3. To assess the impact of these policies on the property market transactions.

1.4       Research Questions

This research therefore is intended to answer the following questions;

1. What are the various Taxation policies of government that impinges on property market in Minna?
2. What is the impact of these policies on property market?
3. What are the issues and changes of these policies as they apply to the transaction of the property market in the area?

1.5      Significance Of The Study

            The study covers the effects of taxation policies on the property market transactions. The potential findings of this study will be beneficial in the following ways:

1. To the public authorities, it will guide in making appropriate regulations on taxation especially as it affect real property transactions.
2. To property developers, it will assist them in following appropriate policies to guide their mode of investment and transaction in real property.
3. The study will also serve as a reference materials for others and researches alike who may wants to carry out further studies on the subject.

1.6    Scope of the study

         The scope of this study is limited to effect of taxation policies on property market    transaction in Minna metropolis Niger State.

1.7    Definition Of Terms

         property: (encyclopedia) all land, structures, firm attached and integrated equipment           [such as light, Fixtures or a well pump], anything growing on the land, and all “interests” in         the property which may be the right to future ownership (remainder), right to occupy for a period of time [tenancy or life estate] the right to drill for oil, the high to get the property     back [a version] if it’s no longer used for its current purpose [such as use for a hospital,           school or city hail], use of air space [condominium] or an easement across another’s           property.

         Property market: is one of the many varieties of system institutions, procedures, social       relations and infrastructures whereby parties engage in exchange goods and services by banter, most markets rely on sellers offering their goods or services [including labor] in   exchange for money from layers. It can be said that a market is the process by which the         prices of goods and services are established.

         Taxation: Taxation refers to the act of taxing authority actually levying tax. Taxation as a   term, applies to all types of taxes, from income to gift to estate taxes. It is usually        referred to as an act; any revenue collected is usually called “taxes”. Taxation is one of       the primary powers of government over the people.

1.8     Historical Background of the Case Study

Minna is a city (estimated population 304,113 in 2007) in west-central Nigeria. It is the capital of Niger State, one of Nigeria’s 36 federal states. It consists of 2 major ethnic groups: the Nupe and the Gbagyi

Archaeological evidence suggests settlement in the area dates back to about 47,000-37,000 years ago. Muslim culture filtered into Minna by way of the ancient Saharan trade routes and the city contains many mosques and Muslim organizations. Christianity is a major population in Nigerian Niger State, where Sharia is valid. Minna has a Living Faith Church, a Grace Baptist Church, Nupe Kalvari Churches, Anglican Churches, ECWA Churches, Baptist Churches, Victory Christian Church, The Apostolic Church and many others too numerous to mention. Minna is the home of Nigeria’s former military President Gen. Ibrahim B. Babangida, and of former Head of State Gen. Abdulsalami Abubakar. Dr. Mu`azu Aliyu Babangida resides in Minna as the present governor of Niger State. He served a term of four years (2007-2011), and is currently serving another term of four years (2011-2015) – his last term since the political system does not allow elected governor to serve more than two terms

Cotton, guinea corn, and ginger are the main agricultural products of the city. Yam is also extensively cultivated throughout the city. The economy also supports cattle trading, brewing, shea nut processing and gold mining. [1] Traditional industries and crafts in Minna include leather work and metalworking

Minna is connected to neighboring cities by road. Abuja, the capital of the country, is only 150 km away. Minna is also connected by railroad to both Kano in the north and Ibadan and Lagos in the south which is also boarder by Illori city. The city is served by Minna Airport.

Minna is the seat of the Federal University of Technology Minna, that has campuses in Gidan-Kwano and Bosso, the Niger State College of Education, and the Police Secondary School.