The Effect Of Taxation Policies On The Property Market Transaction
Increasing demand for urban and rural infrastructures and dwindling revenue allocations in Nigeria have informed the Edo State Government to promulgate Land Use Charge Law (2001) as a way of increasing internally-generated revenues through property tax. The Law stipulates a formula for assessing the Charge payable on properties in Lagos State, amongst other provisions. The aim of this study is to determine the effect of taxation policy on property market transaction in Auch Edo state which is one of the thematic areas of Vision 20:2020 for Nigeria. A process of inferences was adopted to evaluate the law in addition to questionnaires administered on Estate Surveyors and Valuers within Auchi metropolis. The study found that the formula is inappropriate and that high tax and penalties may discourage investment in new housing and maintenance of existing stock. It therefore recommended a review of the Law and in addition suggested an appropriate basis of fair and equitable tax such that the goal of Vision 2020 is realizable.
Background of the Study
Housing Literallymeans Building or shelters in which people live work dwell etc and to nation as a critical component in social and economic fabric [Kabir and Bustani, 2009]. It represents one of the most basic human needs. As a unit of environment, it has a profound influence on the health, efficiency, Social behavior, satisfaction and general welfare of the community. To most groupshousing meansshelter but to other it means more as it serves as one of the best indicators of a persons standard of living and his or her place in the society [Nubi, 2008]. It is a priority for the attainment of living standard and it is important to both rural and urban areas.
These attribute make demand for housing to know to bound as population growth and urbanization are increasing very rapidly and the gap between housing need and supply becomes widen. Cultural factors such as preferences and value or social Status, taste and financial resources, also influence a home physical characteristics.
In developing countries, poor housing delivery has been attributed to inadequate mechanism and system for land allocation, funding mortgage institutions and infrastructure. Also the government policies dictate the nature and manner of the market and how activities are run in the body polity. Despite this significance of housing adequate supply has remained a mirage to all carder of the society in Nigeria. The situation is very particular to most developing countries where population is growing at exponential rate and rapid urbanization becoming a num, and discrepancy in housing need and supply is high.
According to Kabir and Bastani IBID, in a developing country like Nigeria, the housing Problem basically relates to quantitative and qualitative inadequacies on the supply side various government policies in the past have been formulated towards overcoming the huge shortage through several housing reform programmers and how the property market operates. Despite these past efforts housing continuous to be a mirage to ordinary Nigerian.
Currently there are various mass housing delivering programs such as the affordable housing scheme that utilize the republic, private partnershipeffort and several private finance initiative models could only provide for about 3% of the required stock. Thissuggest the need for a holistic solution in approaching the problem.
While the quality of the existing stock that do not meet the minimum quality requirement. Thus this study is necessitated to point out the property market operation in minna with the view of finding a lasting solution to the problem of housing and give directions for other areas in Nigeria.
Statement of the Problem
According to [Kabir and Bustani 2009] the housing problem basically relates to quantitative and qualitative inadequacies. On the supply side, various government policies in the past have been formulated towards over coming the various mass having delivery programs such as the affordable housing scheme that utilize the public private partnership effort and several private finance initiative models could only provide for about 3% of the required stock.
A recent study of the housing situation in Nigeria put existing housing stock at 23 per 1000 inhabitant.
The housing deficit is put at 15 million houses [mabagunje 2002] while 12 trillion will be required to finance the deficit, this is about 4time the annual national budget of Nigeria. Home price and rents on the other hand, have grown ahead of general inflation making matters worse the composition of homes for sale and rent on the market has been inexorably shifting towards very expensive homes.
Also Kabir and Bustani ibid state that current scheme include a “site & Service” that provides low-income beneficiaries with serviced plots including tenure Security and help to build their own houses and the second approach helped house-owners in existing squatter area obtain tenure to their land and to improve their dwelling. In spite of the fact that they may help to improve tenure security, these initiate target population low-income earners usually does not benefit from them. Hence, this study is necessitated to asses the effect of taxation policies on the property market operation in minna, Niger state with the view of point out the impact of these policies in the area to serve as a guideline blue-print and working document for other areas.
This research therefore is intended to answer the following questions;
- What are the various Taxation policies of government that impinges on property market in Minna.
- What are the impact of these policies on property market
- What are the issues and changes of these policies as they apply to the transaction of the property market in the area.
Aim of the Study
The aim of this study is to assess The Effect Of Taxation Policies On The Property Market Transaction In Minna.
Objective of the Study
To achieve the aim the following objective are set:
- To identify the various taxation policies of government that impinges on the property market in Minna
- To asses the impact of these policies on the property market.
- To examine the issue and changes of these policies as they apply to the transaction of the property market in area.
Significance of the Study
The potential finding of this study will be beneficial in the following ways
To the estate surveyors on the need to be sophisticated in their approach in property market transaction. This will largely help to reduced the image and credibility of the profession and also reliability of their report before their highly estimated users.
It will fill gap in literature as there are death information in this respect of research especially in the study area
Users of property [financiers and developers] will be properly and accurately guided.
The following research methodologies shall be the employed for this study
Method of Data Collection
For the success of this research work primary and secondary method of data collection shall be employed.
Sources of Data
Data for this research work will be sourced through questionnaire and back-up with interview.
Some of the team of expect [valuers] and property developers [investors] in the study area will be considered and sample their opinion on the effect of taxation policies on property market transaction in the study area.
In carry at this research work, systematic, stratified and simple random sampling shall be employed
The target population for this study are estate surveyor and users of property [Banks and mortgage institution in Minna Metropolis].
Method of Data Analysis
The method data analysis will involve the use of table and frequency details
Delimitation and Scope of the Study
The scope of this study is limited to effect of taxation policies on property market transaction in Minna metropolis, Niger State.
Definition of Terms.
[encyclopedia] all land, structures, firm attached and integrated equipment [such as light, Fixtures or a well pump], anything growing on the land, and all “interests” in the property which may be the right to future ownership [reaminder], right to occupy for a period of time [tenancy or life estate] the right to drill for oil, the high to get the property back [a version] if its no longer used for its current purpose [such as use for a hospital, school or city hall], use of air space [condominium] or an easement across another’s property.
Is one of the many varieties of system institutions, procedures, social relations and infrastructures whereby parties engage in exchange goods and services by banter, most markets rely on sellers offering their goods or services [including labor] in exchange for money from layers. It can be said that a market is the process by which the prices of goods and services are established.
Taxation refers to the act of a taxing authority actually levying tax. Taxation as a term applies to all types of taxes, from income to gift to estate taxes. It is usually referred to as an act; any revenue collected is usually called “taxes”. Taxation is one of the primary powers of government over the people.
Organization of the Study
This research work is organized in five chapters, for easy understanding, as follows
- Chapter one is concern with the introduction, which consist of the (overview, of the study), statement of problem, objectives of the study, research question, significance or the study, research methodology, definition of terms and historical background of the study.
- Chapter two highlight the theoretical framework on which the study its based, thus the review of related literature.
- Chapter three deals on the research design and methodology adopted in the study.
- Chapter four concentrate on the data collection and analysis and presentation of finding.
- Chapter five gives summary, conclusion, and recommendations made of the study.
Summary, Conclusion and Recommendation
It is important to ascertain that the objective of this study was to evaluate the effect of taxation policy on property market transaction in Auchi metropolis in Edo state.
In the preceding chapter, the relevant data collected for this study were presented, critically analyzed and appropriate interpretation given. In this chapter, certain recommendations made which in the opinion of the researcher will be of benefits in addressing the challenges of tax policies on property market transactions.
Revisiting the interaction between the Nigerian property market and the macro-economy has further confirmed that the use of econometric analysis rather adhoc methodologies purged with simple trend interpolations is plausible. Since residential property rent is a significant feature of most property market in the world, empirical evidence based on this study from Nigeria implies that exogenous influences of the economy (real GDP and Exchange rate) account for 31.4% of the variation within the residential property market. At a disaggregate level, real GDP accounts for a substantial proportion of this variation in the residential property market, while exchange rate account for the remaining of these residential property market variance. In addition the feedback mechanism between GDP and residential property rents, means that these two variables are determined contemporaneously and by implication depicts a somewhat limited integration of the Nigerian residential property market with the economy. The one to two period(s) response shocks of interest rate, real GDP, and exchange rate show a relatively slow adjustment of the market to the ever changing macroeconomic events in Nigeria. Such responses are exogenous and make long run equilibrium within the residential property market almost elusive. The existence of such analysis of this nature will in the end aid useful property market analysis in a market fraught with poor property market data.
The findings shows that tax policy have significant effect on economic growth. The various component have different effect on economic growth, the result showed that indirect tax have a strong positive significant relationship with the level of economic growth in Nigeria within the period under review. Direct tax analysis result showed a weak relationship between economic growth and direct tax policy (CIT, PPT). The study thus conclude that it is important for Government to strengthen the indirect tax and shift more to indirect tax as it offer more growth prospect and less cost and administration challenges.
The study recommends as follows:
- That the government should improve the tax administrative system so as to block possible tax evasion by appropriate by policing of exports and import.
- Lowering the company income tax rate further to encourage more investment to broaden the tax base and promote economic growth.
- Government should broaden the tax base by providing the basic infrastructure and enabling environment for private enterprise to strive. Prudent management and productive utilization of public fund should be encouraged.
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