Tenement Rates And The Land Use Charge: A Comparative Evaluation Of Suitability For Sustainable Municipal Funding

Abstract

Tenement Rate (TR) has been a feature of municipal funding in Nigeria since colonial times. In 2001, Lagos State, one of Nigeria's sub-national units, introduced in its stead the Land Use Charge (LUC) which has subsequently been adopted by four other sub-national units of Nigeria:  Anambra, Edo, Enugu and Ogun States. These developments suggest that TR is unsustainable as a system of municipal funding. Ironically, however, there is discernible in the LUC itself, a potential threat to sustainable municipal funding. This emanates from controversies which have the potential to reduce citizen compliance, and therefore, revenue yield. This paper compares and contrasts the two charges and systems. The findings are that TR, amongst other advantages, has a logical theoretical basis which the LUC lacks; it is locally administered, whereas the LUC is designed and run by the State; TR is constitutionally founded whilst the LUC is a State law of contestable constitutional validity. One may conclude that TR is the better option as its completely local focus suggests a higher potential for wide acceptability and enduring compliance. Contrarily, the hybrid LUC’s many shortcomings, particularly its dual purpose design for local and State needs, attracts controversy which casts a doubt as to its sustainability.