CHAPTER ONE

1.0 INTRODUCTION

1.1 Background of the Study

Nigeria, the most populous black nation south of the Sahara, operates a federal system of

government. There are three tiers of government. These are the federal (central), state and

local. The local government system is the one closest to the people at the grassroots. It is

charged with certain constitutional responsibilities. These responsibilities include the

construction, rehabilitation and maintenance of local roads, drainage, market stalls, primary

schools, slaughter slabs, cemeteries, primary health care and maternity centres. If these

responsibilities are discharged effectively, the quality of life of residents will be greatly

enhanced. To discharge these responsibilities, five distinct sources of revenue exist for a local

government. These are grants, local tax, property tax, fees and charges and loans (Bello-

Imam, 1990). These could be broadly categorized into three: statutory allocation or grants,

internally generated revenue (IGR) and loans. The IGR includes the local tax, property tax

and fees and charges.

Tax is a compulsory sum of money that is levied on the citizens of a community in order to

ensure the continuous provision of services such as electricity, pipe-borne water, roads and so

on by the Government or its agencies to the tax payers. Taxation is not only peculiar to the

modern day, since time immemorial, a form of tax or another has been paid by people to local

authorities. It is a practice that has come to stay. Not only is a tax system the major interface

between a state and its citizens, it is a pointer to the success or failure of a government, a

reflection of the trust the populace have in the government, it also goes a long way to shape

how the economy of a state develops and how effective a state is (Richard, 2015).

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Property rate is one form of tax that is levied on Real properties (Oyegbile, 1996). It is

usually assessed, levied and collected by the third tier of government (the Local government).

In Nigeria, the Federal Board of Internal Revenue, State Board of Internal Revenue and the

Local Government Revenue Committees are charged with this responsibility of collection of

revenue for their respective tier of government.

An effective property rating administration system is important in order to get the best

revenue possible. Property rate is the most common, dependable and sustainable source of

revenue to local governments globally. It is one of the most lucrative sources of local

government financing (Mou, 1996). It is thus essential for the success of fiscal

decentralization and the financing of local infrastructure and service delivery.

Property rating as a form of taxation is a major source of revenue in local governments.

Governments around the world rely to some extent on property taxation (Dzulkanian, 2008).

Similarly, it is one of the main sources of income for Malaysian local governments

(Dzulkanian, 2008). According to Kuppusamy (2008), local government is a public agency

that provides urban services to its communities, this is in responses to the state of nations

increasing overhead cost.

Similarly, property taxes dominate local tax revenues according to (Fox, 2010). The income

generated from property tax is used in the provision of basic infrastructure such as water

supply, street lightening, and disposal of refuse, communication halls, market stalls and roads

among others is to be performed by the local governments being the third tier of government.

Therefore, local governments are expected to harness resources to property rate

administrationas supplement to federal government statutory allocation towards rapid

development (Kuye, 2002).

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1.2 Statement of Research Problem

Tax collection by local governments in Nigeria had been interesting a decline as source of

revenue generation, owing to the increasing trend of non-compliance behaviour exhibited by

the taxpayers. Andy (2003) carried out a pilot study which re-affirmed that there are issues

regarding property tax. The study is triggered by a research work on issues regarding

property tax payment which revealed that the amount of revenue generated is decreasing due

to the unpaid tax by the homeowners (Pawi et al., 2012).

However, property tax revenue generation is executed under inadequate level of payment by

the taxpayer in respect of the property that they own (Pawi et al, 2011). This means that, the

process of property tax collection is facing various issues. Some of the issues involved in the

process of property tax administration include bill distribution, collection functions, etc. The

problem of non-commensuration of the provision of public goods with the tax paid

constitutes the barriers to property tax revenue generation as discovered by Zodrow (2001)

and Dzulkanian (2008).

Hence, this study examines the adequacy of property rating techniques in Ekiti state Nigeria.

The study would justify the internal and external factors which affects the local governments

especially in the area of property tax collection.

1.3 Research Questions

The research questions for this study include:

1. What is the existing property rating administrative structure in Ekiti State?

2. What is the trend of property rate generation in the study area?

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 3. What are the challenges faced in the collection of property rate in the study area?

4. What is the contribution of property rating to the revenue of the local government?

1.4 Aim and Objectives of the Study

The aim of this research work is to assessing the adequacy of property rating techniques in

Ekiti state Nigeria. The objectives stipulated at achieving the specific aim of the study

are to:

1. To identify the existing property rating administrative structure in the study area.

2. To examine the trend of property rate generation in the study area.

3. To examine the challenges facing the collection of property rate in the study area.

4. To assess the contribution of property rating to the revenue of the study area.

1.5 Scope of the Study

No matter how ambitious a researcher could be, no single study can be all encompassing.

Hence, study limits have to be defined clearly. This study focused on tax payers and tax

administrators within Ekiti State.

However, this study shall focus on the challenges of property rating in Ekiti State by

identifying the existing property rating administrative structure, examining the sources of

revenue available to the government and the trend of property rate generation, examining the

challenges faced in the collection of property rate and assessing the contribution of property

rating to the revenue of the local government in the study area.

1.6 Significance of the Study

This study will serve as a scorecard that will help relevant tax authorities in the state to assess

their performance in terms of how they administer property rating and be able to put

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measures in place to tackle the problem of non-compliance on the part of the tax payers and

corruption on the part of tax officers.

Also, it will help the policy makers in this sector to make policies to address challenges

facing property rating practices.

And lastly, it will add up to the existing body of knowledge and will serve as a reference

point for other researchers who may be looking into a similar topic in the future.

1.7 Limitations of the Study

The limitation of the study centers mostly on financial constraint when carrying out this

research work, due to the current hike in price of goods in the country which caused high cost

of printing of journals and the project work. But nevertheless, the available data/information

was still utilized to fashion out something good and substantial for this research work.

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 CHAPTER TWO

LITERATURE REVIEW

2.1 Preamble

The preceding chapter has provided an insight into the structure of this research work. It is an

introductory chapter that contains the background of the study, statement of the research

problem, research questions, aim and objectives of the study, significance of the study and

scope of the study.

In this chapter, concepts that pertain to the research topic are thoroughly discussed. The

history and evolution of rating in Nigeria is first considered, follow by concept of property

rating, then Property rating administration in Nigeria, its problem and prospect.

2.2 Concept of Property Rating

Different authors have different view about the concept of tenement rates. In the word of

Lagbenro (1978) Tenement rate is a levy on developed property which local authorities in

many part of the world are empowered under appropriate local government law to impose in

their areas of authority, he explain further that tenement rating is not levied on road on land

without building or an unimproved lands .Ogunbode (1991) look at tenement rate as just tax

on a property but the occupation of the property. He arrives at rate payable based on the

assessment of the occupier, not just the property.

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According to Olowu (1989) Tenement rates are taxes levied on all immovable properties by a

local government authority. In other word the tax is inevitable. In Great Britain where our

rating law originated, it is the occupier of the property that liable to pay rates. (Shote 1996,

Campell 1982, Anummu 1988) describe tenement rate as a tax on occupation primarily and

or on ownership secondarily by local authority on property to defray expenses on range of

service for which rating authority are responsible. It could be summed up from various

description of tenement rates as taxes levied locally by local government on occupation of

hereditament ( plant and machinery inclusive) within the area of jurisdiction for the purpose

of defraying cost incurred in providing and maintaining social services and amenities to

occupation within the area (Ogedengbe, 2007)

Some properties are usually exempted from valuation list. These include those occupied by

charitable organizations, Ambassadors dwelling, Church, mosque and properties occupied by

international organization such as ECOWAS, AU, NATO etc and government properties.

Furthermore, the rationale for property rate on the fact that property is the vital base of all

wealth. Wealth cannot be generated without reference to land and building, it is therefore

necessary that this all-important source of wealth be taxed for social and economic

advancement of the local government authority that seem to its sustainability. The basis of

assessing tenement rate is the rateable value, also known as assessed value. Rateable value is

defined as the value at which the tenement is for the being, being rated (Olusegun, 2002). The

amount of rates to be paid by an individual is calculated by dividing the estimated income

from tenement rates by the total net annual rental values of all the rateable tenements in the

rating area, the resultant figure is called rate Nairage and is use to multiply the assessed value

of each tenement.

Property rating involves two distinct operations; first is rating valuation and other is rating

administration. Ntamere (1982) has identified three principal steps involved property tax

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administration, via, assessment rate setting and collection. However, Dilinger (1992) has

further broken the steps into five sequence; discovery, valuation, assessment, billing and

collection

Local Government council has contributed immensely to value properties within their

jurisdiction by the provision of services and amenities. They have made social interaction

within the local Government jurisdiction possible which has led to high property value.

The property rating is more stable and reliable as a revenue source than any other tax.

Property value generally is less susceptible to short-hand economic fluctuations than other

major revenue sources in common use, including sales and income taxes. Furthermore,

inclusion of property tax as one component of a diversified tax base means that fluctuations

of any one revenue source will be less destabilizing to overall revenue. Because property,

sales, and income taxes are largely independent, the impact of each tax varies among

economic segments of the population. Also, property rating system are generally more open

and visible than administrative system for other taxes for example, property owners can

examine their assessment and those of nearby properties. An appeals system exist to afford

property owners and opportunity to appeal their assessments In addition, the tax payer usually

is faced with a bill that show the entire liability, thus making the full magnitude of tax

obvious

Finally, property tax can be secured by the property and therefore are difficult to evade. For

these reason, property tax provide a more predictable, consistent amount of revenue. This is

especially true of taxes on real property. (IAAO, 2010)

2.2.1 Advantages of Property Rating

The property rating is more stable and reliable as a revenue source than any other tax.

Property value generally is less susceptible to short-hand economic fluctuations than other

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major revenue sources in common use, including sales and income taxes. Furthermore,

inclusion of property tax as one component of a diversified tax base means that fluctuations

of any one revenue source will be less destabilizing to overall revenue. Because property,

sales, and income taxes are largely independent, the impact of each tax varies among

economic segments of the population. For example, a farming operation may earn little net

taxable income and pay little income tax but will still be required to participate in the cost of

government through property tax on land, building, and equipment. If a state has recreational

area with many property owners who reside in other state. These owner may pay little

income or sales tax, but their demand for services may be high and will only be met by

property tax. As a tax on wealth, as measured by property value, property tax reaches and

includes broad sectors of the citizenry in sharing the cost of government. Elimination of

property rate would shift taxes considerably and could eliminate certain sector from paying

these costs.

Also, property rating system are generally more open and visible than administrative system

for other taxes for example, property owners can examine their assessment and those of

nearby properties. An appeals system exist to afford property owners and opportunity to

appeal their assessments In addition, the tax payer usually is faced with a bill that show the

entire liability, thus making the full magnitude of tax obvious

Finally, property tax can be secured by the property and therefore are difficult to evade. For

these reason, property tax provide a more predictable, consistent amount of revenue. This is

especially true of taxes on real property (IAAO, 2010).

The 1916 local government reform paragraph 45 identifying the importance and advantages

of rating as follows;

1. Revenue Generation: The money realized from property rating goes along way to

supplement the statutory allocation and grant from federal and state level
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 2. Simplicity of operation and low cost of collection as compared with revenue

generated in the long run

3. Revenue from property rating is more reliable compared to other sources

4. It is difficult to evade property tax unlike the direct income tax since the hereditament

is fixed at a location

2.2.2 Disadvantages of Property Rating

1. Problem of accountability: It has been observed that there is always the problem of

accountability after the collection

2. Rates are regressive in nature: It fail to consider the ability of individual to pay and

bear more heavily on the low income group

3. Rate act as a tax on better housing, this is because rate are based on the annual value

of the property

4. Failure of carry out revaluation exercise: It suppose to be done regularly

5. There is little enlightenment campaign on rating in Nigeria (Kuye, 2003)

2.2.3 Essential of Rateable Occupation

There are four essential elements develop by judicial decision in law on occupation

.according to Williams (et al, 1963), they are regarded to as four ingredient of rateable

occupation, they are as follows;

1. There must be actual occupation or possession

2. It must be exclusive for the particular purpose of the possessor

3. The possession must be of some benefit to the possessor

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 4. The possession must not be for too transient a period.

2.2.4 Requirement of a Good Rating System

Some important attribute of a good rating system are same as those for a good tax system

namely;

1. Equitability: The method of assessment must be clearly define and taking into

consideration the general economic condition of the community

2. Simplicity :the enabling laws should clearly define the responsibility of the tax payer

and the authority in charge

3. Economic production :The revenue derive able from property rating should outweigh

the cost and substantially add to local government fund

4. Convenient: The rate charge should be excessive or punitive , it should be very easy

and economic al to administer and pay in order to avoid default

2.2.5 Principle of Rate Assessment

In order to achieve accurate and adequate property rate, there are rule and statues which

should guide the exercise. Such rules are otherwise known as principle, they are as follows

1. The hereditament which is the subject of assessment must be assumed to vacant and

to let (Anwar, 2008)

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 2. The hereditament must be valued in its existing physical state is “Rebus sic stantibus”.

A residential house must be valued as residential house (Okorie, 2005)

3. Actual rent passing on comparable property are best evidence of value but not

necessary conclusive

4. Occupation of a part is occupation of a whole, where a particular tenant or landlord

chooses to have particular occupation of part of hereditament

5. Properties physically separated but known to be performing complementary function

are valued as single functions are valued as single unit

2.2.6 Classes of Rateable Occupation

1. Agriculture

2. Dwelling houses

3. Block of flat/offices

4. Shops

5. Factories and ware houses

6. Cinemas and theater

7. Banking hall

8. Hotel and Guest house

9. Garages

10. Golf club

11. Club

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2.3 Evolution of Property Rating In Nigeria

Property rating is a form of local tax on property, the proceeds of which are use for local

purposes of a public nature, it is as old as the evolution of the earliest communities. It has

been correctly asserted that ‘in the early days of our community development, public services

were limited but include the maintenance of the institution of Emirship, Obaship, etc. as well

as the place of shrine of gods and goddesses of village square’ usually contribution of part of

the harvest of individual crops and contribution work to maintain this service which refers to

as sweat tax was no doubt tenement. It could be regarded as tenement rating if the

contribution is attached to land.

The introduction of monetary economy, rapid urbanization and present mode of living

brought about sophistication and refinement in the application and collection of property

rating, more public goods and service cannot be owned by individual not only because of

their nature but because of their huge capital. it require team effort to do this ,a well

constituted authority protected by law and permitted to levy and collect fund as to be

instituted, this led to the constitution of rating authority (Kuye,2002).

Our rating laws originated from British Poor relief act of 1601 otherwise known as Statute of

Elizabeth, it provide among others things of levying and collection of taxes on every occupier

of land and houses toward the relief of the poor .The primary motive was for maintenance

and provision of infrastructure but more especially for the poor, the act introduce the system

of rating to raise fund for the care of the needy and was organized on parochial basis (i.e

parish to parish). Is for purchase of raw materials or by giving it to those incapable of

working until the enactment of rating and valuation act of 1925 and local government act of

1929 when urban district became rating authority for collection of rate followed by local

government at 1966, general rate act 1967 and finally local government act 1976 .

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All over Nigeria power to levy rate was contained in this assessment ordinance and various

local government legislation. The original assessment ordinance was enacted in Nigeria in

May 1915, over the year this law has been amended. The principle laws governing the rating

assessment in Nigeria were the assessment laws of Eastern Western and Northern Nigeria in

1963, this law provided unimproved values as the Governor or equivalent authority may be

authorize.

The assessment function is the integral part of property tax structure. According to various

laws, the assessment value of property for tax purpose must represent either the full fair

market, or cash value of the property or specific percentage of such value. The simplicity of

rating together with certain yield make rate particularly suitable for societies in which there is

no machinery for collecting a more elaborated tax. The easiest form of tax is the poll tax.

With this tax, everybody pays the same amount. The advantage of this tax is that the total

amount that can raised from a community is limited by sum which poorest member of the

community can afford to pay, such system of rating, rate should be collected from person

who are enjoying the facilities provided by the local authority (Weddicombie,1976)

2.3.1 Statutory Development of Rating in Nigeria

In Nigeria, as an erstwhile colonial territory, the rating system is largely on British Law of

property rating practice and tradition of the Estate profession.

In Nigeria, the power to levy property rate is contained in the assessment ordinance and in the

various local government laws of the states and partly under the township and municipal

ordinance and instruments. It is also found in Edicts at local levels.

Originally, the basis for the assessments tenement is laid down in the Assessment Ordinance

Cap 15 No 10 of 1915, Laws of Nigeria and Lagos State. This important law provided

statutory beginning of tenement rating in Nigeria and it was first practiced in Lagos State. It

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has been amended over the years particularly in 1932 to allow for rating of unimproved

values. Subsequently, the Assessment and Rating (Public Utility Corporations) act of 1956

was enacted and later amended in Chapter 15 and 16 of the assessment Ordinance Cap 15 of

the laws of Nigeria and Lagos, 1958.

All rating authorities in the country derive their power from the 1958 Law. It provided for the

rating annual value, capital value and unimproved value and until 1976 Federal Government

Guidelines for Local Government reform, it remains the principle law in property rating

(www.ogtv.com.ng).

2.4 Property Tax Administration in Nigeria

Nigeria tax administration was moved after the British model of tax administration. Tax

administration involves interpretation and application of tax into practice. This is the function

of tax official and tax consultants who assist the tax payer in computing their taxes. The

organs of government responsible for tax administration are called Federal Board of Internal

revenue (FBIR), State board of internal revenue (SBIR) and joint tax board (JTB). They all

have operation of tax administration (Idibe, 2008). Tax administration basically involves the

following activities

1. Making of returns of information gathering

2. Assessment

3. Objection and appeal

4. Collection and recovery of taxes

Ajayi (2008) report that major form of property taxation that has been in the country is the

property rate or community known as tenement rates and this is specified in the chapter 15
15
and 16 of the law of Federation of Nigeria and applied to the method to be used in assessing

tenement belonging to public utilities namely NEPA, NPA, NRS, thus spread the rating of

these types of property to the whole country. Gradually, rating under the two laws spread to

some of the big town like Kaduna, Kano, Enugu, and Warri.

He went further that property rating in practice in almost all the state of the federation are

operating on form of property tax ranging from capital transfer tax, stamp duty and

withholding tax, while there is selection in the implementation of tenement rates However,

state such as Oyo, Ogun, Niger, Kaduna and Plateau have local government that implement

tenement rate with a supporting edict. Most of the Southern states have their own separate

laws or property rating as provided in Nigeria constitution as at 1998.

Similarly, Olowu (2002) report that a few local government especially all of Lagos and some

others in the South west, successfully introduced property rate with strong support from state

government and in most cases, the world bank. For instance, property rate was only 0.3% in

Port Harcourt but 44% in Ikeja 1989 rising to 58.3% in 1994 in the latter city. The reason as

reported by the author was that Lagos city was in a state that had a strong pro-property tax

policy. Also property rate tended to boost overall municipal finances

Babatunde and Sunday (2008) in a study conducted in Minna, Niger state observed that only

land bases tax levied in the state are stamp duty and business registration, they also reported

that the problems of property tax in Minna are lack of political will on the part of government

to support the authority for assessing and collection of property taxes, only withholding tax

generated 0.07% of internally revenue while noting from stamp duty. He attributed this to the

Government inability to realize property based taxes as a reliable and dispensable source of

revenue.

2.4.1 Stages in Property Rate Administration

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It is the duty of the commission to announce the commencement of the rating activity, the

method to be adopted, properties to be exempted and other necessary information about the

rating exercise. Below are the procedures involved in property rating assessment:

A. Recruitment and Orientation of Staff: the first thing to be done is to recruit staff for the

rating exercise and provide them with adequate orientation about the exercise. Professional

Estate surveyors and valuers are recruited alongside rating officers, rating assistant and field

officers.

B. Public Enlightenment: this has to do with making the inhabitants of the rating area

aware of the rating exercise. This could be achieved via radio jingles and other forms of

advertisement.

C. Preparation of Working Sheets: working sheets containing detailed information about

individual hereditament are prepared to enable easy entry and retrieval of data. These

working sheets include:

i. Field Inspection Sheet: each property has a field inspection sheet dedicated to it and it

records information exclusive to each hereditament.

ii. Rating Valuation Data Sheet: this sheet is used to summarise all information gathered

from the field. It contains the assessed value and annual value of each hereditament. It is

based on the information contained here that the method of valuation to be used is chosen.

iii. Valuation List Sheet: this contains a comprehensive detail about all assessed

hereditament in the rating area according to the zone of each property.

iv. Demand Notice Form: this is a hand bill that is served on all prospective rate payers in

the rating area. It signals the intention of the rating authority to start receiving payments from

all concerned. It contains the period within which payment is expected to be made, penalty

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for default, assess value, annual value as well as the name of the payer. A second demand

notice is usually served if the payer refuses to pay as at when due.

d. Reconnaissance Survey: this is a familiarization visit to the rating area. Everyone member

of the rating team must participate in it. This is done so as to ensure that all properties in the

area are captured even if they will not be included in the rating exercise.

e. Area Zoning: this involves zoning the rating area into working area. Members of the

rating team are then assigned into these areas. This is done to ensure thoroughness and

effectiveness.

f. Market Survey: current market indices of the area such as rent passing, cost of

construction and so on are obtained.

g. Field Survey and Physical Measurement: all properties in the area are visited and

assessed rebus sis stantibus

h. Office Entry and Computation: all data gotten from the field are summarised. The

assessed value or rate liability is computed after valuation must have been carried out.

i. Compilation of Valuation List: an interim valuation list containing the assessed value of

different hereditaments is then published and handed over to the local government.

j. Display of Valuation List: the interim valuation list received by the local government is

then displayed for a period of 30 days. This is done to allow property owners vet the list and

express their dissatisfaction if any. Where there are no objections to the list, it is signed by

the local government and once signed; it becomes a valuation list and cannot be changed.

k. Sending of Demand Notice: a demand notice is sent to all owners/occupiers of the

assessed properties in the rating area stipulating the amount payable and actions that would

18
be taken against anyone who does not comply. A second demand notice is sent after a month

of non compliance. Further disobedience could lead to confiscation and legal actions.

l. Tribunal: a tribunal made up of about 3 or 5 persons is usually setup to look at issues and

complaints that may arise from the displayed interim valuation list, exemption or over

assessment.

These procedures can be classified into 3 major steps namely;

a. Identification of taxpayers,

b. Assessment and

c. Collection of rates

2.5 Bases and Methods of Rating Valuation

2.5.1 Bases of Rating

1. The annual value basis: This is the rent which an hereditament might expected to be

let at the time of valuation from year to year if the tenant undertake to pay usual rent

and taxes and if the landlord undertake to take cost of insurance and other expenses

2. Capital value basis: This is the price at which a purchaser might be expected to give

for the tenement excluding any machine upon or in the tenement ,conceptually ,annual

value and capital value basis of land taxation derived from the same source-that is the

rental value

3. Unimproved value: This is the cost or sum which the owner of an estate or interest on

land if encumbered or un encroached by any mortgage or other charges thereof might

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 expected to realized at the time of valuation if offered for sale on reasonable term and

condition

4. Unearned value basis: This is based on extra value which accrues to property as a

result of work executed by government or public bodies on such land or other land in

the neighborhood

5. The unit charge basis: This as an orthodox basis of rating valuation ,it is statutorily

provided for the rate determined by the statute.

2.5.2 Methods of Rating Valuation

According to Kuye, (2002) as rates are based on annual values, which depend on rent, the

methods of assessing rating are the same as the method of assessing rental values. However,

where, in addition, the law prescribes the adoption of a particular formula, this becomes

obligatory. Moreover, whatever method is used in valuation for rating purposes, the end

result is the determination of rateable value.

There are major methods of valuation method recognized by law for finding of either gross

value or net annual value, depending on the statutory requirement. These methods are as

follows

1. Rental evidence: This method takes as a basis of the rent actually paid for tenement

being valued or the rent actually passing on other comparable tenement in the same

locality, there are two method involve

i. The direct rental valuation method

ii. Indirect rental valuation method

The direct rental method consider the rent of the property being valued on its face value, one

may easily concluded that the actual rent concluded between landlord and tenant in open

market is a fair evidence of rental value of the hereditament, it is the actual rent passing of the
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actual property to be valued. “Prima facie” it is fair to say that as the actual tenant and the

actual landlord agreed to the rent passing in the open market, due to some limitation forect

evidence can’t be applied for rating valuation purposes. Hypothetical tenant is assumed to

overcome these difficulties in practice.

While the indirect method uses the rental evidence collected and compiled to similar property

in the open market within the neighborhood. Evidence collected will be applied to similar

property which they may not be rental. This method clearly requires care in its application

and to be of use in estimating a rental value, these rents must be adjusted to reflect the

statutory term of tenancy envisaged in the definition of gross or net annual value as the case

may be.

2. Comparable method: This is by far most commonly method and undoubtedly the best

method, it base upon evidence of what is actually paid in the market and the real

world. In its simplest form, this means if the hereditament is let at a date which

approximates to the valuation date and demonstrably following in arm length

negotiation. Common practice is to add 10% to the net paid to obtain its gross value

where tenant is responsible for internal repair only

3. Contractor’s test: This method is used only in the absence of rental evidence and

where it is possible to envisage the rebuilding of the hereditament elsewhere, it is

used on properties that cannot be found in the market. But there are number of

argument for this method, Therefore, if the account details available from the property

which are not comparables efficient methods, the profit method can be applied. Steps

to follow include

i. Determine the current replacement cost (CRV)

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 ii. Determine the effective capital value (ECV): Adjustment of CRV e.g.

obsolescence to arrive at the value of the item to the tenant

iii. Apply suitable percentage to ECV to arrive at gross or net annual as may be

appropriate

In Ogun state, Lagos state and some other states, the rate of 5% is taken as ratable value

4. Profit method: This method applies in absence of rental evidence and where there is

sufficient element of legal factual monopoly provided .This occur frequently where

there is element of monopoly, either factual or statutory in the property which the land

lord is letting. If, therefore, a tenant want to enjoy that monopoly in that locality he

must be prepared to pay the hypothetical landlord a share of his profits. The theory is

that hypothetical tenant would relate his rental bid to the profit he is likely to make

from the business he would conduct on the premises. As the name implies, the method

centers on a treatment and study of the accounts; in fact its purpose is to show how

much of the trading surplus is available to pass on to the landlord by way of rent

(Roger and Hector, 1984) This method is used to value hotel, theatre, cinemas e.t.c

5. Formula method: This method is popular in United Kingdom; premises of public

utility undertaking such as electricity and gas board, National coal board, and British

railway e.t.c are required in accordance with the General rate act of 1967. The use of

formula does not involve calculation in the generally accepted sense of the world. It

merely lays down an arithmetic method of finding the gross value or net annual value

for certain hereditament. The formula always from an act of parliament and can only

be use for those hereditament specified by the act (Roger and Hector, 1984). The

statutory formula method are long and complex method of valuation

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According to local government finance Act, 1992 in Britain, tax on domestic property is

based on the capital value of each domestic property. The value of any dwelling shall be

taken into the amounts which on the assessment mention defined as “dwelling might

reasonably have been expected to realize if it had been sold in open market by willing

vendor” However this definition is built based on several assumption. These are,

i. That the sale was with the vacant possession.

ii. That the interest sold was the freehold, or in the case of a flat, a lease for 99 years at a

nominal rent

iii. That the dwelling was sold free from any rent charge or other encumbrance.

iv. That the size layout and character of the dwelling and the physical state of the locality

were the same as at the date of valuation

v. That the dwelling was in the state of reasonable repair

vi. That the dwelling had no development value other than the value attributed to the

permitted development (Bird et. al. 2004)

Capital value of property depend on the extent, access, shape and situation of the land and if

there is a building, then the floor area, condition of the building, conveniences and

appearance of the building etc. Valuation theorem shows that referring all above factors, five

principal methods have been developed. All of these methods approaches to same answer,

different method of valuation are applicable as per the data available.

2.5.3 Mass Appraisal System of Property Valuation

This new development of the science of valuation by the beginning of the 20 th century. It

concerns the appraisal of all taxable property in an assessment district. Hence, it is called as

‘mass appraisal’. After revolution of computers in late 1960s, mass appraisal began to be

referred to as “computer-assisted mass appraisal” or CAMA (Almy et. al. 1996). It means the

way property valuation, when value is estimated not for individual property, but value
23
margins are estimated, employing the analysis of information collected about all properties

being valued.

2.5.3.1 Principle of Mass Appraisal

Mass appraisal requires standardized procedure across many properties. Hence, valuation

models develop for mass appraisal purposes represent supply and demand pattern of group of

property rather than single property. Statistical methods are used to measure deviations of all

sales within the population database from mass appraisal value. IT emphasize equation, tables

and schedules, collected called model, such model can be viewed as two-step process

i. Specification of the basic model and

ii. Model calibration

Eckert et al (1990) motioned three basic functions of mass appraisal system such as

reappraisal, data maintenance, and value update. Mass appraisal techniques emphasize

valuation model, standardized practices, and statistical quality control and it consist of four

subsystems;

i. A data management system

ii. A sales analysis system

iii. A valuation system

iv. An administrative system. These four subsystems are independent.

2.6 Collection of Tenement Rate

A rate collector is an employee of the rating department of the local government area or

consultant (whose consent must be obtained on appointment). The duties mainly are the

collection, the rendering of return of rates collected to the local government council. Two

major assignments involved in the process of rate collection are:

24
 1. Sending demand notice

2. Settlement of rate bill

Sending if demand notice: All owners whose properties have not been exempted from paying

property rates and whose names and address are entered in the valuation list are those who

are send this notice.

Settlement of rate bill: Once the ratepayers receive the bills, quite a number of them would

show interest in settling their bills, the present practice is that, the rate payers normally go to

the local government rating department to pay their tenement rate manually, some rate payers

take as much as week before they could pay, due to long queues and occasionally absentee

account clerks, hence the need to devise a more advanced, payer friendly and modern method

for tenement rate collection. It is ideal to have 100% collected rate, but in practice, this is

difficult to attain. Nonetheless, a very good collection system could result in 85% collection

rate and good enlightenment and collection procedures, it is uncommon to have 90%

collection rate

Adebayo and Rowland (1970) suggest that taxes allocated to local authority would be such

that can be assessed and collected at minimum cost, thus fulfilling another basic canon of

taxation i.e. economy, it will be wrong to give local authority that task of collecting only

those task, which the government itself is unwilling or unable to collect or do is not

considered the collection or because of the low yield from the taxes

2.6.1 Problems of Rate Collection

Unlike PAYE system (income tax) most individuals find it difficult to par with lage sums of

money as tax on property occupied.

1. In respect of rate, some ratepayers complain of not gaining any benefit from paying

rates, as most facilities and infrastructure are still not provided

25
2. Because there are other existing charges by the government parastatals, the payment of

tenement rate is viewed as an additional burden so the supposed ratepayers will want

to opt for it evasion

3. The impact of this tax is usually heavy-the tenant will have to pay this rate in addition

to the high rent and where landlord has pay it, it must be taken out of the meager rental

income from such property. (Kuye, 2002)

2.7 Impact of Property Rating in the Local Government Area

Local government in developing countries supply a range of services-from those that exhibit

mainly private goods characteristics (water, sewers, solid water collection and disposal,

public transits, public recreation and so to those that exhibit mainly public characteristics

(local streets and roads, street lighting, fire and police protection, neighborhood park etc ).

For services with mainly private goods characteristics, individual benefit, income

redistribution is not a goal, spillovers are unlikely to exist, and operating and capital cost can

be measured and recorded. Here, user free would be relatively easy to administer and would

be the best financing instrument for satisfying the principles of efficiency, accountability,

transparency and fairness.

For services provided mainly collective or public goods benefit (specific beneficiaries cannot

be identified), user fees are inappropriate. Instead, these should be funded from a local tax

imposed on residents (or exported to the same extent services are) with necessary adjustments

through the use of grants to account for spillovers; that is, benefit from these services that

spillover into neighboring communities should be funded from something other than a local

tax. While there may some debate over the criteria that should be satisfied in setting a local

tax, it is generally agreed that the following criteria should be met as closely as possible.

26
 1. Tax base should be relatively immobile, thus permitting local government to vary

their tax rate tax rate without losing much, if any, of the tax base

2. Tax yield should be stable and predictable

3. The tax should not be one that is easy to export to non-residents (in other word,

should be borne by taxpayers in the taxing jurisdiction)

4. The tax should be visible to ensure accountability and transparency

5. Tax should not create harmonization problem with taxes of senior levels of

government nor should it create harmful competition between local governments

6. The tax should be easy to administer

Of possible tax alternatives for local governments, the property tax meets these criteria better

than any other tax. It tax base is largely immobile. Revenue is generally predictable and

stable in that it does not vary with the cyclical swings in economy activities as much as

personal income and consumption based tax revenue. The part of the tax that is on residential

property is unlikely to be exported. It is highly visible to the local community. If the property

rating is a local tax only (senior levels of government not involved), harmonization problem

and wasteful tax competition should not be a problem

Finally, it is local tax that is piggybacked onto an existing federal or regional tax, but this

may be small price to pay if local governments are to have autonomy and flexibility in setting

tax policy, both important ingredient of responsible, efficient and accountable local

government.

The FAO (2002) also outline the uses of property rating as:

1. A source of local revenue: Throughout the world property taxes are commonly

employed as the main source of locally generated revenue for the good reason that

27
 there is no other major source of taxation revenue that is exactly geographically

defined. It is possible to use local income taxes and /or local sales taxes for generating

local government revenue but both have difficult administration problem.

2. As a primary source of revenue, property tax plays an important role in

decentralization and the autonomy of local government. Full decentralization of

government incorporates the power to raise revenue independently in addition to

powers allowing local government to use the funds as they see fit in accordance with

the limits of their legal power. Increasing independent powers of raising revenue

through property rating thus become important.

3. Support for other function: Valuation list compiled for local government may be used

by other bodies, particularly those that can be termed “single function authority” such

as water boards. Water charges are commonly based on the assessed value in the

valuation lists.

4. Valuation list may be used in transitional economies for other purposes such as to

establish lease rates on government owned land. Where land markets are not yet

developed, mass valuation result can also be used as basis for establishing market

values for properties. They are not able to rely on central government funding and

have to raise their own revenue.

2.8 Hindrances to Property Rating in the Local Government

The following problem are noted by Adebgoyega (1990)

1. Political: The levying of property rate is a major political issue

28
2. Definition: The question of “ what is exactly property rate is” seems difficult to

answer ,is it a tax on property or on the occupier for service they enjoy .The question

is hardly answered satisfactorily

3. Cultural: Historically, the tax has been presented as a form of tax on property itself,

this made the imposition to be least acceptable

4. Location: The location of property do not encourage assessment for rating purpose

except those in few urban center

5. Technical: Until recently ,the mode of arriving at the rate to be paid is beset with a lot

of problems, the difficulty of valuation and shortage of qualified estate surveyor are

responsible for this

According to Olajide and Esan, (1996), the issue and challenges are as follows;

1. Ignorance on payers and impostors: lack of adequate information and knowledge on a

part of rating payer or the rating authority may be responsible to poor rating system

2. Personnel inadequacy: This problem goes to the lack of qualified personal to work in

the property rating and valuation unit of local government.

3. Lack of fund (finance): this problem is mostly associated with local government

having asserted that property rate is a major source of finance

4. Inadequate legal appeal machines: This explains the fact the legal and appeal

machines in the country are grossly inadequate

5. Lack of proper environment planning: absence of a comprehensive master plan for

different part or the country is a big problem facing proper administration of property

rating

29
 6. Poor assessment and valuation: in competency or inconsistency of tax assessment as a

result of employing wrong valuation basis.

In the word of Nuhu (2008), no perfect policy exists due to challenges in human

endeavors. Thus, the problems should be avoided and if possible eradicated to ensure a

good tax system that ensures the attainment of public goods.

i. Assessment and valuation inconsistencies: Determining the appropriate rate of tax most

times requires expert opinion and usually this is not available. Very skilled personnel

are needed to carry out these activities. This have a greatly affect the accuracy of

collected data.

ii. Illiteracy and ignorance: This has over time been seen as a major hindrance to the

collection of property taxes. To a great extent, affected individuals either do not see a

need/information of it or they do not know anything about it.

iii. Legal documents: The statutory nature of property taxation makes it necessary to be

provided with appropriate legal document or aiding laws to back its activities. Most

times these documents either are not in existence in the region or they fall short of some

provisions. To ensure successful property taxation in the state, tax laws need to be

either created or modified to fit present day activities.

iv. Attitude of the tax payer and tax authority: No one wants to pay tax to the government

on the protest that do not what the tax is used for. However to be supplied to them.

v. Defective policies: Most times especially in developing countries, government operates

on policies inherited from the western world which to a great extent are not workable in

these environments. All proposed policies should go through a stakeholders should be

carried along from the formation stage up to the implementation level

30
vi. Another challenge identified is the absence of appropriate appeal machinery which

hinders the performance of any tax policy. Olusegun (2003) also stated that often denies

the tax payer of there to seek redress. Where the tribunal is set-up, they have been

founded to be ineffective.

vii. Political will: Despite the potential of property tax as the most lucrative local for urban

local government, it is extremely prone to political interference and corruption. The

reason is that, the tax would tend to fall most heavily on wealthier property owner who

normally are more politically active.

31
 CHAPTER THREE

RESEARCH METHODOLOGY

3.1 Preamble

This chapter is aimed at formulating an appropriate methodology framework to give detailed

background about the study area and to achieve the aim of and objectives of the study.

To achieve this, the study will consider the population of the study area to determine the

sample design and identify the size to be sampled. More so, the type of instrument to use in

collecting data will need to be determined and the type of questionnaire to be prepared

thereafter.

3.2 The Study Population

This is a specified group of people from which inferences would be deduced. Thus, for the

purpose of this research work, the study population for this study was the head of rating

section in the local government council and some selected rate payer of hereditaments in

Ekiti State

3.3 Research Design

The research design considered most for this research is the survey. It involves obtaining

information directly from all local government rating authority area in Ekiti state by

administering questionnaire as well as in depth interview. Such question may be presented

orally, on paper or in combination so far the response to the questions comes from the person

addressed in the question. The beauty of survey method lies in the versatility. According to

Asika (2000), the survey is the only way to procure many types of research information as

well as the most economical way in many other situations. Where other methods are possible,

they are likely to be more difficult and expensive.

32
3.4 Sample Frame

The sample frame is the complete list of all unit or element from which size will be selected.

In this case, the sample frame will be head of rating section in the local government council

and some selected rate payers within the local governments in Ekiti state. Out of the total

coverage, in which questionnaire would be distributed randomly in order to secure

information necessary for the study.

3.5 Sampe Size

Sample size is the observation taken from the population that any organization gathered

which can be used to represent the whole population.

3.6 Sampling Techniques

Having established the actual sample size, selecting the appropriate sample techniques will be

considered in order to obtain accurate information from the respondents. Purposive random

sampling method was adopted for this study in order to give every member of the population

equal chance of being selected

Hence, random sampling gives every member of the population chance or probability of

being selected in the sample.

3.7 Data Type and Sources

In bid to gather the data used in this research, various means were used depending on the type

of information of information sought.

The primary data used was gathered through the use of a questionnaire and interview from

the rate payers and the rating authority of Abeokuta South local government.

The secondary data include relevant information collected through publish materials from

journals, magazine, seminar papers, internet, and textbook from respective professionals.
33
3.8 Data Collection Instrument

Basically, there are several types of instrument that can be used in collecting data such as

personal interview, postal questionnaire, and personal administration of questionnaire,

telephone interview and direct observation

However, for the purpose of this research work, preparation of well structure questionnaire,

observation and personal interview will be adopted in the study area while retrieval was equal

through the same process.

3.9 Questionnaire Design

The questionnaire/interview guide will be prepared for the department of tenement rating in

the local government and questionnaire will be prepared and administered to the rate payer in

the local government also.

Furthermore, Part A will contain question on the personal data of the respondents and Part B

will be based on question related to this study and the likely solution to the identified

problems will be recommended.

3.10 Data Analysis Tool

The study employed quantitative techniques using descriptive analysis and interpretation of

data, tabular, statistical and textual modes of data presentation are used. The responses for

each relevant question in the questionnaire are represented in the table and the statistical

result used to compare relative importance to various answer.

34
3.11 Study Area

Abeokuta South Local Government, usually referred to as the “PREMIER LOCAL

GOVERNMENT” in Nigeria owing to her historic eminence as well as the seat of the

Government of Ogun State that came into existence in 1976, was the first independent State

in Nigeria as Local Government Administration originated from the ancient city in 1898.

The Local Government was divided into two, namely, Abeokuta South Local Government,

Ake and Abeokuta North Local Government, Akomoje, from the defunct Abeokuta Local

Government in 1991 by the then Head of State and Commander-in- Chief of the Armed

Forces, General Ibrahim Badamosi Babangida (Rtd.). Abeokuta South Local Government

was recently divided into three namely, Abeokuta South Local Government, Abeokuta South-

East LCDA and Abeokuta South- West LCDA with the creation of 37 Local Council

Development Areas (LCDA’s) by the Governor of Ogun State, His Excellency Senator,

Ibikunle Amosun in May 2016.

The Local Government shares boundaries with Odeda Local Government in its Northern

frontier, Obafemi/Owode on the Eastern while Abeokuta North Local Government lies on the

West and Southern part respectively. Abeokuta South Local Government with Private Mail

Bag No. 2036, Sapon, Abeokuta, occupies an Area of 57,35sq kilometers. It has an estimated

population of 374,843 people.

The Local Government is mainly inhabited by the Egbas who are predominantly of the ‘Egba

Eku’, ‘Egba Aarin’ and ‘Egba Agbeyin’ progeny. Though the Local Government has other

tribes living in the Local Government Area because of it’s being the seat of the Government

of Ogun State.

35
 CHAPTER FOUR

DATA COLLECTION, ANALYSIS AND PRESENTATION

4.1 Preamble

Data analysis involves bringing together data collected from various source, arranging and

manipulating them to generate, meaningful information. The method of data analysis will

depend on the type of data, scale of measurement and the expected results or findings. This

chapter deals with presentation and interpretation of data collected by the researcher in the

course of carrying out the research. It also discuss the data analysis and findings from 150

questionnaire administered to rate payers in the rating area of which 144 being 96% was

returned.

4.2 Analysis of Rate Payer

Table 4.2.1: Sex of Respondents
Option Frequency Percentage (%)
Male 113 78.5
Female 31 21.5
Total 144 100
Source: Field Survey, 2021

Table 4.2.1 revealed that 113 respondents being 78.5% of the survey sample were male,

while the remaining 31 being 21.5% were female. This implied that majority of the tax payer

in Ado-Ekiti Local Government is male.

Table 4.2.2: Highest Academic Qualification of Respondents

Academic Qualification Frequency Percentage (%)
OND/NCE 13 9.0

HND/BSc 79 54.9

MSc. 41 28.5

Ph.D 11 7.6
Total 144 100
Source: Field Survey, 2021

36
The data presented in table 4.2.2 show the highest academic qualification of respondents. 13

respondents being 9% of the survey sample have OND/NCE, 79 respondents being 54.9%

have HND/BSc, 41 respondents being 28.5% have MSc while the remaining 11 respondents

being 7.6% have Ph.D. The fact that the majority of the respondents (54.9%) have HND/BSc.

as their highest academic qualification confirms that the respondents to this survey were well

educated and information gathered from them can be relied upon.

Table 4.2.3: Marital Status of Respondents

Marital Status Frequency Percentage (%)
Single 9 6.3

Married 124 86.1

Widow/Widower 11 7.6
Total 144 100
Source: Field Survey, 2021

The data presented in table 4.2.3 show marital status of respondents. 9 respondents being

6.3% of the survey sample were single, 124 respondents being 86.1% were married while the

remaining 11 respondents being 7.6% were widow/widower. It is rather interesting to know

that none of the respondents were divorced. The fact that the majority of the respondents

(86.1%) were married coupled with the fact that none of the respondent was divorced

confirms that the respondents to this survey are matured enough and without psychological

challenge to provide realistic information that would be useful for the study.

Table 4.2.4: Years Spent In the Property/Neighbourhood

Years Spent Frequency Percentage (%)
1 – 3 years 15 10.4
37
 4 – 6 years 31 21.5

7 – 9 years 37 25.7

10 years and above 61 42.4

Total 144 100
Source: Field Survey, 2021

The data presented in table 4.2.4 show years spent in the property/neighbourhood by the

respondent. 15 respondents being 10.4% of the survey sample have spent between 1-3 years,

31 respondents 21.5% have spent between 4 - 6 years, 37 respondents being 25.7% have

spent between 7 – 9 years while the remaining 61 respondents being 42.4% have spent 10

years and above. The fact that the majority of the respondents (42.4%) has been in the

property/neighbourhood between 10 years and above confirms that the respondents to this

survey were of good knowledge and adequate information about the study area and answers

supplied by them can be relied upon.

Table 4.2.5: Type of Property Occupied by Respondents

Property Types Frequency Percentage (%)
Duplex 2 1.4
Block of Flats 25 17.4
Tenement Building 73 50.7
Bungalow 29 20.1
Others 15 10.4
Total 144 100
Source: Field Survey, 2021

The data presented in Table 4.2.5 above presents the type of property occupied by the rate

payers. It was reveal that 2 respondents being 1.4% of the survey sample occupied a duplex,

25 respondents being 17.4 occupied a block of flats, 73 respondents being 50.7% occupied a

tenement building, 29 respondents being 20.1% occupied a bungalow while the remaining 15

respondents being 10.4% occupied other types of property. This could however be said that

majority of the respondents in the area occupied a tenement building.

38
Table 4.2.6: Quality of Awareness on Property Rate Collection to the Rate Payer
Option Frequency Percentage (%)
Excellent 23 16.0
Very Good 27 18.8
Good 59 41.0
Fair 20 13.9
Poor 15 10.4
Total 144 100
Source: Field Survey, 2021

The data presented in Table 4.2.6 presents the quality of awareness to rate payers the rate

payers. It was revealed that 23 respondents being 16% of the survey sample were of the

opinion that the awareness of property rate collection was excellent, 27 respondents being

18.8% were of the opinion that it is very good, 59 respondents being 41% were of the opinion

that it is good, 20 respondents being 13.9% were of the opinion that it is fair while the

remaining 15 respondents being 10.4% were of the opinion that it is poor. This implied that

majority of the respondents (41%) were of the opinion that they are aware of the fact that

property rate are being collected in the study area. The implication of the above table is that

most of the respondents are aware that local authority levy rate on occupation of

hereditament.

Table 4.2.7: Effectiveness of the Existing Property Rating In the Study Area
Options Frequency Percentage (%)
Very Effective 3 2.0
Effective 5 3.47
Undecided 44 30.55
Slightly Effective 20 13.88
Not Effective 67 46.52
Total 144 100
Source: Field Survey, 2021

The data presented in Table 4.2.7 show the effectiveness of the existing property rating in the

study area. It was revealed that 3 respondents being 2.0% of the survey sample were of the

opinion that the existing property rating is very effective, 5 respondents being 3.47% were of

39
the opinion that it is effective, 44 respondents being 30.55% were undecided, 20 respondents

being 13.8% were of the opinion that it is slightly effective while the remaining 67

respondents being 46.52% were of the opinion that it is not effective. This implied that

majority of the respondents (46.52%) were of the opinion that the existing property rate in the

area is not effective.

Table 4.2.8: Notice of Property Rate Payment

Option Frequency Percentage (%)
Bill from L.G. 25 23
Notice delivered at home 71 60
Notice pasted at a conspicuous place 11 8
Ratio and Newspaper 17 5.5
Others 20 3.5
Total 144 100
Source: Field Survey, 2021

The data presented in table 4.2.8 show the notice of demand for property rate. It was revealed

that 25 respondents being 23% of the survey sample were of the opinion that the notice of

property rate payment is gotten from the bill from the local government, 71 respondents

being 60% of the were of the opinion that the notice of property rate payment was normally

delivered at home, 11 respondents being 8% were of the opinion that the notice was gotten

from the radio and newspaper while the remaining 20 respondents being 3.5% 25 respondents

being 23% of the survey sample were of the opinion that the notice was gotten from other

means. This implied that majority of the respondents (60%) were of the opinion that the

notice of rate payment is usually delivered at home.

Table 4.2.9: Rate Collection Office

Option Frequency Percentage (%)
Yes 131 91.0
No 13 9.0
Total 144 100
Source: Field Survey, 2021

40
The data presented in Table 4.2.9 show the response of respondents of closeness of the rate

collection office to the rate payer. It was discovered from the study that 131 respondents

being 91% of the total sample population are of the opinion that they have the houses close to

rate collection office while the remaining 13 respondents being 13% were against the

opinion. It could be said that most houses levied rate are very close to the tax office area.

Table 4.2.10: Rate due payment

Option Frequency Percentage (%)
Local Council 37 25.7
Bank 52 36.1
Home Collection 36 25
Ward Office 11 7.6
Others 8 5.6
Total 144 100
Source: Field Survey, 2021

The data presented in table 4.2.10 show the place(s) where they pay there tax when due. It

was revealed 37 respondents being 25.7% of the survey sample pay their rate at the local

council, 52 respondents being 36.1% pay their rate at the bank, 36 respondents being 25%

pay their rate t the ward office while the remaining 8 respondents being 5.6% pay their rate at

other places. This implied that majority of the respondents (36.1%) pay their rates at the

bank.

Table 4.2.11: Effect of property rating to the Local Government

Option Frequency Percentage (%)
Positive 43 29.9
Negative 101 70.1
Total 144 100
Source: Field Survey, 2021

41
From the data presented in table 4.2.11, it was revealed that 101 respondents being 70.1% of

the survey sample were of the opinion that property rating has a negative effect on the local

government while the remaining 43 respondents being 29.9% were of the opinion that it is

positive. This implied that the majority of the respondents (70.1%) were of the opinion that

the effect of property rating is felt negatively in the local government.

Table 4.2.12: Benefit Derived From Property Rate Paid

Benefit SA A U D SD ∑WF Mean Rank
(5) (4) (3) (2) (1)
Provision of Electricity 3 4 17 82 38
15 16 51 164 38 288 2.0 5th
Construction of Roads 11 18 10 74 31
55 72 30 148 31 336 2.33 4th
Development of Health Centre's 31 49 29 23 12
155 196 87 46 12 496 3.44 2nd
Provision of Portable Water 35 48 15 34 12
175 192 45 68 12 492 3.42 3rd
No Benefit 44 50 11 32 7
220 200 33 64 7 524 3.64 1st
Source: Field Survey, 2021

The data presented in table 4.2.12 show the analysis of benefit derived from property rate

paid. it was revealed that property rate have not been benefited by the people with a mean of

3.64. Development of health centre and provision of portable water was ranked 2nd and 3rd

with a mean of 3.44 and 3.42 respectively. Construction of roads were ranked 4th and

provision of electricity were ranked 5th with a mean of 2.33 and 2.0 respectively. Hence, with

the look of things and having gone through analysis in the task above, it could be said that

populace are not benefitting from the rate collected in the area.

Table 4.2.13: Hindrances to Effective Property Rate System

Hindrances SA A U D SD ∑WF Mean Rank
(5) (4) (3) (2) (1)
Ignorance of the People 55 69 2 13 5
275 276 6 26 5 588 5.40 2nd
Unreasonable Charges 63 49 9 17 6
315 196 27 34 6 578 5.30 3rd
42
 Non Provision of Public Service 51 69 11 13 -
255 276 33 26 - 590 5.41 1st
Default by Rate Collections 23 49 41 20 11
115 196 123 40 11 485 4.45 4th
Lack of awareness and enlightment 9 22 43 56 14
schemes 45 8 129 112 14 388 3.56 5th
Source: Field Survey, 2021

Table 4.2.13 show hindrances to effective property rate system in the area. It was revealed

from the table that non provision of public service constitute the interest and ranked first with

a mean of 4.150; This is followed by ignorance of the people and unreasonable charges with

mean of 3.925 and 3.895 and was ranked 2nd and 3rd respectively. Other that forms lower are

default by the collectors and lack of awareness and enlightment scheme ranked 4 th and 5th

with mean of 3.340 and 2.965 respectively.

CHAPTER FIVE

SUMMARY OF FINDINGS, CONCLUSION AND RECOMMENDATION

5.1 Preamble

In this concluding chapter of this study, and attempts were made to make summary of the

work content of the research, make conclusion and recommendation based on the findings.

5.2 Summary of Findings

43
This study is defined to access is property rating administration in Ado Local Government of

Ekiti state in order to realize the way property rate are assessed, collated, collected and used,

as well as challenges confronting administration of property rating in the state.

The main objective of undertaking this research study is to examinee the property rating

practice in the study area. In order to achieve this stated objectives, the researcher endeavored

to generate a number of research questions. The researcher as well stated the usefulness of the

research both to tax authorities and tax payer.

Findings shows property rate is not so effective in the area. This is because majority of the

rate payers do not comply with the rating authorities and all penalty guided by the law have

not being used. Failure to enforce those laws must have been the political will of the people

in powers.

Furthermore, the findings show that non provision of public services as stated by the law

towards the use of the rate, unreasonable charge on assessed value on the part of the rating

authorities and government in charge have discourage populace who are occupied owner of

property in paying their rate. Unreasonable charges as assessed value on the part of the rating

authorities and government in paying their rates.

Although, finding shows that government have embarked on several projects across the local

government area, many are yet to satisfy with the said embarked project by the council.

With regards to hindrance militating against the smooth operation of property rate, many of

the respondent at the rating office identified people’s ignorance and inappropriate valuation

procedures and difficulties to gain access to rate payer’s premises as the major challenges

faced in the collection of property rate in the study area.

5.3 Recommendations

44
Based on the observations, findings and analysis made in this study, the following

recommendations have been made.

 Suitable Public Enlightenment

Public enlightenment programme should be organized on the role of property rating in the

local government finance, by so doing, rate payers who doesn’t know what rate is meant for

will be educated on it and they must cover all area within their jurisdiction, that is why the

local government authority should provide the map of their jurisdiction so as to cover all such

area where rating exercise have not reached.

 Rate Payers Should Be Remind on Their Responsibility to Pay Rate

Naturally, people need to be reminded, after the services of demand notice of their obligation

to pay and this can be done with adequate manpower. Adequate man power should be

recruited into the department. Train personnel should be used in carrying out the exercise and

must be skilled personnel like an Estate Surveyor and Value.

 Proper Documentation

Detailed and up to date record should be kept of property in the local government as this will

enable the local authority in assessing rateable property when finally the collection of such

taxes is fully enforced. According to Aliyu (2008) the success of determining property tax

largely depends upon proper land registration and adequate documentation.

 Amenities Should Be Provided

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Property rating is a source of revenue to the local government, property consumes a lot of

amenities which must be provided for and therefore expected to pay for the services through

property rate. This imposes duty on the council as property owner expect values for their

money in term of physical improvement in their environment. It is therefore necessary for

local government to provide local services such as street light, portable water, good road,

health care centre, electricity etc. The responses from rate payers are that they have not been

benefited from the rate, so therefore, local government should be alive to their responsibility

to people so as to encourage them to pay.

 Valuation Court Should Be Establish

Non existence of appeal machinery and valuation court is a major problem which as cause

poor performance of rating in the local government. It is expected to have a valuation court to

have effective rate enforcement vehicle in the local council and should be directed to the

court, the court should consist of Estate surveyor and valuer, landlord, rate payers and local

government agent. The existence of such machinery will be potential threat to defaulters and

therefore will make them to pay rate and that call for review of local government rating edicts

and proper implementation.

 Valuation List Should Be Review

Valuation list should be subject to review in every five year but we found out that there are

10-20 years valuation list still exist in the local government. New property would have been

erected; change of use, the value will have change from the old ones. If these continue, there

will be reduction in the revenue from rate in the local government.

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  Rate Nairage Should Be Determine Based on the Council Financial Need

The use of fixed rate for properties which is widely practice by local government as rate

nirage is very wrong, though, the argument is that they said it makes work easier for them but

it bring about complain. Rate nairage should be determine base on the financial need of the

local government e.g. financial need / value of all rateable properties in the rating area will

give us the rate nairage to be used.

5.4 Conclusion

The study undertaken in Ado-Ekiti Local Government, Ekiti state has evidenced that there

exists property rate administration. By and large, the fundamental issues which this study

focused on includes property rating administration ,its impact on the tax payer and hindrance

to effective and efficient property rating process in the State, proffering recommendation to

the hindrance and murder to improve tax rating system in the area and in Ekiti State as a

whole.

Based on the findings of this study, it can be concluded that government have not done

enough towards provision of amenities to meet the needs of the people in the state

particularly the local government residents. If could how ever be concluded that if property

rate is properly administered and collected will go a long way in providing the two tiers of

government in Ekiti State and Nigeria at large in provision of betterment for its people and

sustainable development .

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