What Are Tenement Rates?

Tenement rates, also known as property rates, are taxes levied on the owners or occupiers of landed properties, including residential, commercial, and industrial buildings. These rates are typically calculated based on the value or size of the property and are a significant source of revenue for local governments worldwide. In Nigeria, tenement rates are legally recognized as a revenue source for local governments under the Fourth Schedule of the 1999 Constitution and various state laws.

Despite their potential, tenement rates remain underutilized in Nigeria due to poor enforcement, lack of accurate property data, and low compliance rates. Building an effective tenement rate system can provide local governments with a steady stream of revenue to fund critical projects and improve service delivery.

Methods to Estimate Taxation Using Building Footprints

1. Area-Based Taxation:
   • Calculate the total area of each building footprint.
   • Apply a tax rate per square meter (or square foot) based on the location, type of building, or zoning regulations.
   • Sum up the taxes for all buildings in the area.
2. Zoning-Based Taxation:
   • Classify buildings into zones (residential, commercial, industrial, etc.).
   • Assign different tax rates to each zone.
   • Calculate taxes based on the building area and its zone.
3. Building Height or Volume-Based Taxation:
   • Use 3D building data (if available) to estimate the volume of each building.
   • Apply a tax rate per cubic meter to account for taller or larger buildings.
4. Land Use and Valuation:
   • Combine building footprints with land use data to assess the value of the property.
   • Use market value or assessed value to calculate taxes.
5. Proximity to Amenities:
   • Incorporate proximity to amenities (e.g., schools, hospitals, transportation hubs) to adjust tax rates.
   • Buildings closer to amenities may have higher tax rates.
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Click the states to see the maps and estimated sums – Abia, Imo, Kaduna, Oyo

Click to see building footprints – delay may occur

The Way Forward

Building tenement rates as a sustainable revenue source for local governments in Nigeria requires a holistic approach that addresses the challenges of data collection, enforcement, public awareness, and accountability. By leveraging technology, simplifying processes, and demonstrating the benefits of compliance, local governments can unlock the full potential of tenement rates.

Ultimately, tenement rates are not just about revenue generation; they are about building a partnership between local governments and their citizens. When property owners see the tangible benefits of their contributions, they are more likely to comply willingly, creating a virtuous cycle of development and prosperity.

Conclusion

Tenement rates represent a significant yet underutilized revenue source for local governments in Nigeria. By prioritizing property enumeration, leveraging technology, strengthening enforcement, and promoting transparency, local governments can build a robust tenement rate system that provides the financial resources needed to drive development and improve service delivery. The time to act is now—by investing in tenement rates, local governments can lay the foundation for a brighter future for their communities.