Amid a brutal backlash from Lagos residents over a four increase in land use charges in Nigeria’s commercial city, fresh questions are now being raised over the private company- Alpha Beta, exclusively named in the law to manage the revenue collection process.
In the section of the law titled “Rules Governing the Distribution of the Lagos Land Use Charge” section 2 specifically states that; Alpha Beta or any other designated person(s) or corporate body who has the responsibility of monitoring the incoming revenues of the State through the collecting banks, shall provide a report to the Accountant General of the State.”
Alpha-Beta Consulting has acted as a revenue mobilization and collection advisor to the Lagos State Government and came into prominence under former governor Bola Ahmed Tinubu (1999-2007) who used the agency to drive collection of internally generated revenues in the state.
The company has been the preferred option over state-owned, Lagos Inland Revenue Service, in newly introduced land use charge, a practice said to be driven by the latter’s efficiency.
The specific mention of Alpha Beta, analysts say, gives the company an edge over all other companies that may want to tap into the lucrative business opportunities that would be generated by the land use charge.
The land use charge will generate billions in revenues for Lagos State and consequently Alpha Beta.
“The law has made Alpha Beta the number one agent for the collection of the land use charges.
They have the first right of refusal before any other agent can be appointed. It is even more interesting that the law did not even mention the Lagos Inland Revenue Service (LIRS) as the main agent but a private company,” a legal practitioner told BusinessDay.
Two phone calls seeking comment from the LIRS went unanswered from the LIRS went unanswered.
Osagie Agbolanhor a Lagos based legal practitioner described the specific mention of Alpha Beta as an “abnormality” that should not have happened.
“A law endureth forever. A law is supposed to be a living document. A law should answer to time and space, take care of the present and look into the future. It should not mention anything that will die. What happens to law if Alpha Beta is wound up tomorrow” Agbolanhor asked?
Since bursting out to the scene under Tinubu’s administration, Alpha Beta has been closely but controversially associated with the Lagos state government.
Tunde Rahman, Tinubu’s spokesman, said he was “quite busy” and unable o respond immediately when contacted by BusinessDay for comment.
A phone call to a number found on the company (Alpha Beta) website went unanswered.
The company’s clients, as stated on its website, include the Lagos State Government, Abia State Government, Lagos Inland Local Government and Amuwo Odofin Local Government.
It is unclear the percentage of revenues that Alpha Beta retains for collecting revenues on behalf of the Lagos State Government.
However, different media reports have put it anywhere between 10 percent to 15 percent of collected revenues.
This has been criticized in the past being excessive and that the LIRS should have been trained to by now be in charge of revenue collections in the state.
Critics pointing to the 2 percent charge by System specs to manage the country’s Treasury Single Account say Alpha beta’s charges are over the roof.
Ahead of the 2015 elections, the then governorship candidate of the People’s Democratic Party (PDP), Jimi Agbaje had criticized the role played by Alpha Beta in revenue collecting promising to terminate their contract if elected.
“We can’t have consultants forever. A model is needed that even when we use consultants, they transfer skills and leave,” said Agbaje was quoted to have said.
In a petition dated October 14, 2012, one Dominic Adegbola, an indigene of Lagos State, had asked for detailed information from then Commissioner of Finance of Lagos State under the Freedom of Information Act (FOI) and detailed information on the contractual relationship between the Government of Lagos State and Alpha Beta Consulting Limited since 1999.
But in a response dated November 5, 2012, Olanrewaju Akinsola, the then Special Senior Assistant to the Governor (Justice Sector Reforms) in the Office of the Attorney-General and Commissioner for Justice, declined to release the information arguing that the FOI is only federal legislation and that it is binding on the States.
However, in December 2017,a Lagos High Court, Ikeja ruled in an unrelated case that the Freedom of Information Act is applicable to the Government of Lagos State and does not require domestication to have an effect.
The revised Lagos land use charge has attracted a lot of outrage in the public domain with many commentators on social media accusing the Lagos State government of not being accountable enough on its expenditures to ask Lagos residents to pay even more tax.
“I hope the Lagos state government consulted appropriately with people before he announced the outrageous charges, because the increment does not agree with the economic mood of the people,” said Ebenezer Babatope, a former minister of transport and aviation.
“I must say it is terrible I hereby condemn it in all dispenses that it is never done .it is going to impact very badly economically when you are asking a man to pay more that 80 percent on large charges it is not going to be easy at all and it is going to compound our problem in this country and increase the clamour of people for a better governance than what they are seeing now.”
Meanwhile the Lagos State governor, Akinwunmi Ambode, says the state is ready to dialogue with agitating groups over the Land Use Charge law signed into effect on February 8.
Ambode said this at a meeting Tuesday, with private sector players and business groups, tagged “Lagos Means Business” held at the Eko Hotel and Suite, Victoria Island.
This was as Aliko Dangote, president, Dangote Group, who described Lagos as the friendliest/safest city to do business in Nigeria, expressed hope that the state government would review the rates.
Other business tycoons at the event were Jim Ovia, chairman, Zenith Bank; Subomi Balogun, chairman, FCMB; Razaq Okoya, chairman, Eleganza Group, Oba Otudeko, chairman, HoneyWell Group, Tony Elumelu, chairman, United Bank for Africa, who announced a donation 0f N100million to the Lagos State Security Trust Fund(LSSTF), among other dignitaries.
At the meeting, Ambode responded to concerns raised by the citizens and business groups, including Lagos Chamber of Commerce and Industry (LCCI), Nigeria Employers Consultative Association (NECA), investors and property developers in the state, who said the new charges amounted to a huge burden on businesses and residents.
The governor said the review of the charge became imperative as it was last reviewed 15 years ago. According to Ambode, whereas the infrastructural deficit of Lagos is put at over N14 trillion, the total revenue that accrued to the state in 2017 was N284 billion, out of which only N13.3 billion came from Land Use Charge.
“I do not want to increase taxes, but there are responsibilities to tackle, so we need money,” the governor said, and sought the understanding of the business community and the citizens with regards to the new law, saying the tax was majorly imposed on commercial property and not meant to stifle businesses.
He also said that of the estimated 24 million population in Lagos, of which 8 million were eligible to pay tax, only 4 million were captured in the tax net. Of these figures, he said only 2 million filed their tax returns in 2017.
Taxes are needed to attend to increasing infrastructure needs of the megacity, he said, saying from the average of about N25 billion monthly internally generated revenue of the state, only about N10 billion was left to undertake infrastructure development.
As a governor with the mandate from the people, the onus was on him to encourage the rich to pay taxes and then use such taxes to maintain social balance between capitalism and social justice that ensures that the poor also enjoy dividends of goods governance, he said.
He told the audience that his administration was also trying to restrict itself from frequent borrowings and look inward to fund infrastructure and meet demands of the citizens, and this could only be achieved through taxes.
The Land Use Charge Law, 2018 (LUCL), which repealed the Land Use Charge Law 2001, is a consolidation of all property and land based rates and charges in Lagos State.
Accordingly, the tenement rates law, the land rates law, the neighborhood improvement charge and all other similar property rates or charges, other laws or amendments to any such property laws or amendments to any such property laws in the past, ceases to apply to any property in Lagos State, as from 2018.
The charges which are based on the market value of eligible property are as follows: Owner occupied residential property, 0.076 percent per annum of the assessed property value; Industrial premises of manufacturing concerns, 0.256 percent per annum of the assessed property value. There are, however, some exemptions granted in the law. The market value of each property is now required to be reviewed by the Lagos State commissioner of finance, at least once every five years, based on the information provided by the professional property valuers to be engaged by the government.