The Caswell Franklyn Column – Lawless Government Ignores the Rule of Law
In the Budgetary Proposals on August 16, 2016 the Minister of Finance introduced something called the National Social Responsibility Levy (NSRL). It is supposed to be levied on all imports at the border and local/domestic production at a rate of 2% with effect from September 1, 2016. In order to make the imposition of yet another tax palatable, the Minister claimed that this new levy was intended “to assist in offsetting the cost associated with financing public healthcare service provision…”
Even though this country is already severely overtaxed, many people including me did not mind having to pay increase prices, for the stated reason, because of the dire state of the Queen Elizabeth Hospital and other public healthcare facilities. But now, after nine months of collecting money to improve healthcare, as far as I can see, there is no discernible positive change to the delivery of health services.
In the most recent Budget the Minister increased the rate of the levy from 2 to 10%. This time Government did not bother with the pretence of financing healthcare. It just seems as though government is trying to dampen demand for foreign goods by taking away the means to pay for them, thereby conserving what little foreign exchange the country is now earning. Mind you, that is a discussion for the economists and out of my league.
Nonetheless, I would like to find out under what authority is Government continuing to collect this levy. Don’t get me wrong, I am not questioning the Minister’s right to impose taxes during a budget presentation. My concern is that after nine months, I am yet to see the NSRL Act in place so that Government can lawfully continue to collect this tax.
The Minister of Finance is empowered by the Provisional Collection of Taxes Act to impose a new tax or increase the rate of an existing tax, without first passing the enabling legislation, but that power has limitations. Sections 3, 4 and 5 of that act are relevant:
3.(1) Subject to this Act, where
(a) the imposition of a tax; or
(b) an increase in the rate of an existing tax,
is contained in any budgetary proposals, then from the date specified by the Minister in such budgetary proposals (hereinafter in this Act referred to as the specified date)
(i) the imposition of such tax shall be as effective as if an enactment had been made or passed imposing such tax and the tax shall be payable as from the specified date;
(ii) the increase in the rate of the existing tax shall be effective from the specified date and the existing tax shall be payable at the increase rate as from that date.
(2) Any tax or increase in the rate of an existing tax which becomes payable pursuant to subsection (1) shall cease to be so payable if the appropriate enactment for the imposition of the tax or for increasing the rate of the existing tax is not made or passed within 4 months of the date on which the budgetary proposals are made to the House of Assembly.
Section 4.(1) goes on to provide that the tax is payable from the time the Bill imposing the tax is introduced into the House of Assembly, if no date is specified in the Bill. Section 4.(2) then states:
(2) Any tax or increase in the rate of an existing tax which becomes payable pursuant to subsection (1) shall cease to be so payable if the Bill
(a) is withdrawn from the House of Assembly; or
(b) is not passed by the House of Assembly within 4 months of the date on which it is introduced therein.
More importantly, section 5 states:
If pursuant to subsection (2) of section 3 or subsection (2) of section 4 any tax or any increase in the rate of an existing tax ceases to be payable, ten any sums paid by any person by way of such tax or increase in the rate of an existing tax shall be refunded to that person.
In a nutshell, those sections are saying that Government can introduce measures in a budget to impose new taxes or raise the rate of an existing tax but it has four month to pass the necessary legislation. Failing that, the tax ceases to be payable and any sums paid shall be refunded.
Government must set the example and obey the laws of this country. There is only one lawful way for Government to retain the money that has already been collected by this NSRL. It can pass a validation act but such an act would require the votes of two-thirds of the members of both Houses of Parliament, since it would have to alter the Constitution.
Now let’s see what the Opposition will do.