LGs plan tenement rate, market levies’ takeover, project N361bn revenue

Fresh findings have shown that the 36 state governments and the Federal Capital Territory may forfeit about N361bn revenue obtained from levies and other tax collections to the 774 Local Government councils in Nigeria.

An analysis using the 2023 state Internally Generated Revenue data released by the National Bureau of Statistics showed that the 36 states and FCT collected a total sum of N341.6bn from these sources.

The PUNCH gathered that the figure currently remitted as part of sub-national Internally Generated Revenue will be collected by Local Government officers when the implementation of the financial autonomy for the councils is finalised.

In May, the Federal Government, represented by the Attorney-General of the Federation and Minister of Justice, Lateef Fagbemi, filed a lawsuit to challenge the governors’ authority to receive and withhold federal allocations meant for Local Government Areas.

The suit sought to prevent state governors from unilaterally dissolving democratically elected local government councils and establishing caretaker committees. The AGF argued that the constitution mandated a democratically elected local government system and did not allow alternative governance structures.

On July 11, 2024, the Supreme Court issued a landmark judgment affirming the financial autonomy of the 774 LGs in the country and ruling that governors could no longer control funds meant for the councils.

The seven-member Supreme Court panel, led by Justice Garba Lawal, ruled that it was illegal and unconstitutional for governors to manage and withhold LG funds.

The apex court also directed the Accountant-General of the Federation to pay LG allocations directly to their accounts, as it declared the non-remittance of funds by the 36 states unconstitutional.

However, six months later, the Federation Accounts Allocation Committee disbursed a total of N2.08tn in allocations to Local Government Councils between July and December 2024 to state government accounts.

The Minister of Finance and Coordinating Minister of the Economy, Wale Edun, said the Federal Government was yet to commence direct payment to the respective LGs due to some “practical impediments.”

One such hindrance may include the forfeiture of market levies, road taxes, and tenement rates collection, among others, to the Local Governments.

Commenting, the President of the National Union of Local Government Employees, Hakeem Ambali, described the collection of certain taxes by state governments as illegal.

According to him, some of these revenues are domiciled under the Local Government.

Ambali, who spoke in an interview with The PUNCH, noted that some of the LGs’ collectibles, as enshrined in the 1999 constitution, have been hijacked by state governments and should be returned.

He said, “We also believe that all the collectibles of Local Governments, according to the 4th Schedule of 1999 Constitution, which has been hijacked by the state governments, should be released back to the Local Governments.

“I mean that the signage fee that is being collected by the state governments is illegal. What is known to law is the advertisement rate. The issue of collecting revenue in terms of refuse evacuation belongs to the Local Government.

“The creation of land use charges, land rent charges, and what have you, is unknown to principal law. What is known is the tenement rate collected by the Local Government.

“We also believe that even the collection of tolls and rates and taxes at motor parks belong to the Local Government. So the creation of a motor park board and what have you is illegal. It is a way of hijacking Local Government resources. Presently some states are even collecting revenue from primary health centres, which belong to the Local Government.”

The PUNCH analysis using the 2023 state IGR data obtained from the NBS indicated that the 36 states and the Federal Capital Territory collected N341.6bn from these sources.

The amount is different from the monthly statutory federal allocation disbursed to the three tiers of government by the central government.

A state-by-state breakdown of the amount to be forfeited showed that Lagos, Federal Capital Territory, and Rivers would be the highest losers when this policy is implemented

Lagos State will forfeit N77.1bn to the 20 LGAs in the state. FCT will forfeit N65.22bn to six LGAs in the capital city, and Rivers will forfeit N32.83bn to 23 LGAs.

Ogun will pay N2.98bn,  Delta (N3.1bn), Edo (N9.69bn), Kaduna (N17.71bn), Kwara (N1.501bn), Oyo (N1.47bn), Akwa Ibom (N2.73bn), Ondo (N11.63bn), Kano (N7.08bn), Enugu (N7.11bn), Anambra (N1.62bn), Ekiti (N6.85bn), Cross Rivers (N11.21bn), Ebonyi (N6.81bn), and Bauchi (N453.01m).

Other states including Osun will forfeit N640.79m, Jigawa (N2.52bn), Katsina (14.72bn), Kogi (N7.22bn), Plateau (N981.22bn), Nasarawa (N3.97bn), Abia (N3.87bn), Zamfara (N5.51bn), Niger (N10.23bn), Imo (N4.61bn), Bayelsa (N2.78bn), Borno (N4.46bn), Benue (N693.96m), Sokoto (N4.78bn), Adamawa (N728.99m), Gombe (N262.85m), Kebbi (N4.46bn), Yobe (N1.43bn), and Taraba (N701.36m).