Abuja High Court Stops Area Councils From Imposing Tenement Rates

Introduction

On 12th April 2018, Honourable Justice Valentine B. Ashi of the High Court of the Federal Capital Territory held that Area Councils in the Federal Capital Territory (FCT) do not have the power to collect tenement rates on property because there is no enabling Act enacted by the National Assembly for that purpose. This decision was handed down by the learned judge in an originating summons filed by Planned Shelter Ltd against all the Area Councils in the Federal Capital Territory where the plaintiff raised the following questions:

  1. Whether Area Council in the FCT have the power to legislate, assess and collect tenement rates without complying with the Constitution;
  2. Whether the collection of tenement rates in the FCT amounts to double taxation.

Decision of the Court

On the first issue the court held that Section 7 (1) (j) of the Fourth Schedule to the 1999 Constitution confers on local government councils the constitutional power to collect tenement rates as may be prescribed by their respective State Houses of Assembly or in the case of Area Councils in the FCT, as prescribed by the National Assembly. The court held that unless the House of Assembly or in the case of the FCT the National Assembly, enacts a law or an Act prescribing the rates for charging tenement rates, no local government council in any State or Area Council in the FCT could levy/charge tenement rates. The court held that since the National Assembly has not enacted any law prescribing tenement rates in the FCT, the tenement rates cannot validly be charged on any property in the FCT. However, the court held that a resolution of the National Assembly adopting the various tenement bye-laws enacted by the various Area Councils in the FCT would suffice to give the tenement rates the required constitutional backing.

On whether the payment of tenement rate will amount to double taxation in view of the fact that the plaintiff already paid fees to the Abuja Environmental Protection Board, the court held that tenement rate will not constitute double taxation. The court cited a decision of the Court of Appeal in Bamak Pharmacy Ltd & Ors. v. Abuja Municipal Area Council (2010) LPELR 3850 CA.

It should be noted that the Abuja Municipal Area Council which is affected by the decision of Abuja High Court has informed the general public that it will continue to levy and collect tenement rates based on the decision of the Court of Appeal in Afdin Ventures Ltd v. The Chairman, AMAC which was delivered on 12th May 2014.

For more information contact:

Maxwell Ukpebor, Samuel Esuga, Olumayowa Oluwole
Adebiyi Tax & Legal
House 20 Wema Terrace
Udi Street Ikoyi
Lagos

info@adebiyitaxandlegal.com

+234 803 960 0520

This Legal Alert contains information on tax /legal issues. It does not constitute legal or professional advice on such issues. Where specific legal advice is needed, the services of a solicitor/tax adviser should be sought.

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