Government regards property taxation as a means of
ensuring generation of revenue, curbing of property speculation and
redistribution of income. Others are enforcement of conformity with town
planning rules and regulation, maintenance of infrastructures and so on.
The tax payer on the other hand regards tax as a
burden and unbearable, which led to high rate of default. Hence, the clam
our for discontinuation of same. Over
the years, there have been series of legislation regarding taxation by various
government. For instance, in 2001, Lagos State Government introduced land use
charges which has been generating a lot of problems.
This study intends to examine critically the effects
of property taxation on real estate investment in Nigeria with particular reference
to Lagos State as a case study.
To achieve this, the effects of taxation will be
considered on residential, commercial, industrial and other taxable properties
within the case study and suggested solution shall be proffered to the
TABLE OF CONTENTS
1.0 Introduction 1
1.1 Statement of the problem 2
1.2 Aim and objectives 2
1.3 Research hypothesis 3
1.4 Scope of study 3
1.5 Significance of study 4
1.6 Limitation to the study
1.7 Definition of terms 5
1.8 References 7
2.0 Literature review and
theoretical frame work 8
2.1 Literature review 8
2.2 Historical back ground
of property taxation in Nigeria9
2.3 Concept of taxation 10
2.4 Principles of taxation 15
2.5 Types of taxation 17
2.6 Need for property
2.7 Effects of property
2.8 References 26
3.0 Research methodology and
case study area 27
3.1 Introduction 27
3.2 Restatement of research
3.3 Source of data 27
3.3.1Primary data 28
3.3.2Secondary data 28
3.4 Characteristics of the
population of study 28
3.5 Sampling techniques 29
3.5.1Sampling design 29
3.5.2Sampling procedure 29
sampling size 29
3.6.1Questionnaire design 30
3.6.3Collection of responses 30
3.7 Techniques for data
3.8 Limitation of the
research methodology 31
3.9 Case study area 31
Presentation and Analysis 39
4.2 Distribution of the Questionnaires 39
of Property Taxation in Nigeria 45
Of Hypothesis 55
Problems of Property Taxation in Lagos 58
of Finding, Recommendation, Implementation and Conclusion 60
5.1 Introduction 60
5.2 Summary of
5.3 Recommendation 61
5.5 Conclusion 63
for Further Studies 63
Government all over the world must necessarily
source for revenue from various aspects or sectors of the economy to meet their
spending property taxation represents one of the major sources of revenue.
Society itself is dynamic where population is increasing on a rapid rate on
daily basis and developmental activities are being carried out. The phenomenon
equally demands that government should constantly seek to increase revenue
derivable from all sources, either by widening tax bases or increment on rate
Britain for instance, property taxation is
the second way to their income as a yield. It produces 15% of total national
taxes in 1974 and 13% of local government revenue in the United Kingdom.
Similarly, 25% of all local government revenue in the United States
is derived from property taxation and second to the intergovernmental
transfers, 37% in 1989. OLAWALE AJAGBE .
Samson Agboto (2003) stated that properly taxation
is one of the fundamental tools to generate revenue by various government e.g.
local government throughout the world realized money or fund from tenement rate
while the state and Federal Government generate funds through capital gains tax
or withholding tax (as applicable).
However, the effects of the imposition of these
taxes on real estate investment are the area, which this study will examine.
1.1 STATEMENT OF THE PROBLEM
Over the years, the payment of tax or real estate
investment in Nigeria has been a controversial issue between the tax payers and
the government also, landlord and tenant each acting knowledgeably to avoid the
responsibility of tax payment on the property they owned or occupied and the
associated problems in apportionment and collection of these taxes are all the
issue asking for solution.
Coupled with the above is the clamoring by the tax
payers that government has neither been able to provide necessary infrastructures
in some areas nor maintain such infrastructures provided some years back which
are reason for such levies.
1.2 AIM AND OBJECTIVES
The aim of this study to examine the effects of
property taxation on real estate investment in Nigeria with Lagos as a case study. The following are the
objectives aimed at achieving the above stated aim.
identity various types of property in the study area.
b. To evaluate the various forms of property taxes imposed on real
estate properties in the study area.
c. To identity the relative effects of various types of property
taxes on real estate investment in the area.
d. To proffer possible solutions to identified effects.
1.3 RESEARCH HYPOTHESIS
Ho: Property taxation has no significant effect on the choice of real
Hi: property taxation has significant effect on
the choice of real estate investment.
Ho: Taxes imposed has no significant effect on
the choice of real estate investment.
Hi: Taxes imposed has significant effect on the
real estate investment.
1.4 SCOPE OF STUDY
Property taxation is a wider field of study, but
this study will focus mainly on the effects of the property taxation on real
estate investment n Nigeria.
However, the scope is limited to Lagos
as the study area.
The study will be narrowed down to Lagos State
because 85% of the area is highly developed being the former federal Capital of
Nigeria. Also the area contains different land uses a specially does that are
taxable. This ranges from residential, commercial, and industrial to mixed
uses. Data collected, we believe all correspondence regarding our research
shall be ascertained following as intentions to carry out the research on
effects of property taxation on real estate investment in Nigeria with Lagos State
as a study area.
To know the land use pattern of the study area, the
below various activities are being carried out:-
a. To identity the various ratable properties in the study area
e.g. commercial, residential and industrial properties.
b. To identity the types of property taxation imposed on real
estate investment in the study areas and
c. To proffer necessary solutions to the identified problems and to
know the effects of property taxation on real estate investment on the study
1.5 SIGNIFICANCE OF STUDY
Real estate taxation has been a
controversial issue in recent time. Various taxes imposed on real estate
investment range from withholding tax, capital gain tax, capital transfer tax,
and tenement rate tax, among the host of others. While it has been a source of
income generation to the authority concerned, its payment as always been
generating arguments among which is effective utilization of the tax collected
by such body or government agent.
Closely related to the study, are the overall
effects of these taxes on real estate investment. This ranges from not allowing
the require return from such investment to adequate maintenance of such
However the significance of this study lies in the
fact that it will help the decision makers (tax authorities) to adjust various
taxes as imposed on real estate properties.
Also it will enable individual to determine types of
real estate investment to invest on. This is so because some types of property
command higher taxes than others.
Moreover, the study will also contribute to the body
of knowledge – academicians of various levels will find it useful for future
1.7 LIMITATION TO THE STUDY
The aim of this is to identity and analyzes the
effects of property taxation on real estate investment in Nigeria with reference to Lagos State
as a study area.
Narrowing down the study to Lagos
itself is limitation because all the micro and macro effects of property
taxation can not be obtained in Lagos
alone. For instance, state laws and edicts as regards property taxation varies
from one state to another.
a. Relative inability to get the
required information from
tax authority concerned and the
owners of taxable properties in the study area.
b. Some responses of the people to
c. Time constraint is also act as a limitation, this is so
because there is impositions of
specific time when we are suppose to complete and submit the study.
1.8 DEFINITION OF TERMS
Property is a physical structure but it is also a compliable legal concept.
Most people see it in the light of object that can be owned or possessed. In
the legal sense however, property consists of not the object but rather of
man’s right with respect to material objects, which can be described as an
exclusive right of owing, enjoying and disposing of a thing. It produces income
in the form of rent and peculiar in its characteristics.
Tax is a compulsory levy by the government of any country through an
appropriate unit of agency, usually the internal revenue department, against
the income or wealth of an individual, partnership or a corporate body.
Taxation is a prior charge on income from property. Depending on the country
concerned, huge profits from capital gains or transfers is heavily taxed.
Taxation can be, as the process by which government compulsory impose levy on
individual, companies and properties to generate funds for the provision of
4. REAL ESTATE:
Real estate is the all things below, under or on the land permanently attached
Is the forgoing of a capita sum in return for a regular income over a period of
time. It is also a method rests on the
theory that the capital value of an interest in landed property, freehold or
leasehold, is directly related to the income or annual value of the property.
An investment is the use of “indirect process” to obtain a higher output.