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Effect of taxation policies on real estate development in Rivers state metropolis, Nigeria
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1.1 BACKGROUND OF THE STUDY
This project is on Effect of taxation policies on real estate development in Rivers state metropolis, Nigeria. Having realized that the real estate and real estate management industry also plays a crucial role towards the country’s Economic growth, this researcher found it necessary to take a keener look into this neglected, almost invisible, but very significant sector in the community of Rivers State.
Real estate management can be defined simply as the management of urban and rural buildings to make money for the owner. Estate management can also be defined as an art of science of directing and supervising of one’s interest in land or landed real estate in other to achieve some optimum returns which may not only be financial but political, social statute, prestige and other returns.
Housing literally means 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 groups housing means shelter but to other it means more as it serves as one of the best indicators of a person’s 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.
The purpose of this paper is to promote discussion on a relatively simple, sustainable, speedy and cost-effective system of property taxation which can be introduced in jurisdictions with a paucity of the resources normally required to administer a more complex ad valorem property tax regime. This discussion takes place within the context of existing examples of banded tax assessments and is based on the needs and the limited resources of the so-called developing and transitional economies.
Property taxes, or more specifically, taxes on real estate, are imposed in almost every country in the world as part of a balanced system of taxation (IAAO, 2010). Such taxes can be broadly classified in two ways:
(a) ‘General’ taxes, such as an income tax, capital gains tax, transfer tax, death / inheritance taxes, and sales tax, are imposed on a range of real estate assets or transaction events. These include the receipt of income from investments, or capital receipts on the disposals of a range of assets, including real estate. In general terms, real estate is treated no differently from any other asset class. These are not what we classify as ‘property taxes’, and this paper is not concerned with such ‘general’ taxes;
(b) ‘Recurrent’ taxes on the value of, or some surrogate figure applied to, units of real estate, which may comprise ‘land’, ‘land and buildings’ or ‘buildings’. Other assets may be included within these definitions but only because of their (physical) attachment to the land etc. and because of the nature of the definition of taxable property, imposed by the individual nation’s legislation. Thus, for example, where the tax is imposed on ‘land and buildings’ or ‘buildings’ alone, the taxable real estate may include plant and machinery, pipes installed in the building for the supply and disposal of water, electrical services and other ‘chattels’ which have become an integral part of the building.
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 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 partnership effort and several private finance initiative models could only provide for about 3% of the required stock. This suggests 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 Rivers with the view of finding a lasting solution to the problem of housing and give directions for other areas in Nigeria.
1.2 STATEMENT OF THE PROBLEM
Rivers State society in general is well known locally for a deep rooted culture of taxation policies which is significant towards the running of real estate management in the State. This study focuses on establishing the underlying challenges posed on the management of real estate as a result of taxation policies in the state. Investigation is also done on the possible and feasible related long term solutions to the challenges in this particular sector. This study seeks to get to the core of these issues and bring them to the public for the necessary strategic decision making to be taken from an informed basis.
1.3 RESEARCH QUESTIONS
This research therefore is intended to answer the following questions;
- What are the various Taxation policies of government that impinges on real estate management in Rivers?
- What are the impacts of these policies on management of real estate in Rivers?
- Are there any significant relationship between taxation policies and real estate development?
- What is the level of real estate development in Rivers?
- How efficient is the taxation policies in Rivers in ensuring real estate development?
- What are the underlying problems imposed on the development of real estate by taxation policies?
1.4 AIMS & OBJECTIVES 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 Rivers
- To assess the impact of these policies on the property development.
- To examine the significant relationship between taxation policies and real estate development
- To examine the level of real estate development in Rivers
- To ascertain the efficiency of taxation policies in ensuring real estate development
1.5. SIGNIFICANCE OF THE STUDY
This study is crucial to all the inhabitants of Rivers state and even all states in Nigeria. Through the study, all the real estate owners, real estate seekers, government authorities (policy makers) and all the existing legal real estate and real estate management institutions shall have a well documented and better understanding of how taxation policies in the state influence real estate development. The findings in this study could also help the stakeholders in the real estate and real estate industry to make sound decisions towards sustainable development in this crucial sector. The study shall be very useful to the research community in the real estate and real estate management industries of different countries.
1.6 DELIMITATION AND SCOPE OF THE STUDY
The scope of this study is limited to effect of taxation policies on real estate development in Rivers metropolis.
1.7 LIMITATIONS OF THE STUDY
- Network interconnectivity to enhance elaborate research
- High level of illiteracy
- Organization operational huddles.
- Time and cost constraints due to cause of scarcity in gasoline to go about the research.
1.8 RESEARCH METHODOLOGY
The research design is according to Mbachu (2005) a plan or strategy for conducting the research, the design deals primarily with the question to be asked, to whom, how and when. The objective of a proper research design is to obtain as much valid information as quick as possible. This follows the fact that according to Mbachu (2005:109) once the research problem has been adequately formulated to specify the type of information needed, the researcher must work out his research design, as a plan, the research design deals with such things as population of the study, sample size, instrumentation, strategies for data collection etc.
Therefore, for this study, survey design was used to collect, collate and analyze data for this study employing the instrumentation of interview and Questionnaires as the methods for gathering data for this study. This is because according to Jekins, stack and McDermont (2003:4) Survey method is the most appropriate design in communication research that gauges and ascertains the feeling and perception of a cross section of the people on the process and effects of mass communication.”
For this study therefore, the survey research design was adopted to examine the effects of property taxation policies on real estate development in Rivers
1.9 DEFINITION OF TERMS.
Real property: [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 [reminder], 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 it’s 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.
Taxation: 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.