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Tying up loose Budget ends


Albert Brandford

Tying up loose Budget ends

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WHEN the House of Assembly resumes sittings on Tuesday after  the summer recess, the Administration will likely roll out a packed  legislative calendar.
Senior Ministers have already indicated some of the new measures  for which it will be seeking approval, chief among them: an Electric Light and  Power Bill, a Cultural Industries Bill, the Barbados Revenue Authority Bill and amendments to the Customs Act.
But before the Government gets  too deeply involved in such weighty developmental issues, it has some important housekeeping, particularly some of the mess created by the 2013 Budget with some measures,  which were to take effect in September and from October 1 are still not  in place and shrouded in confusion  and uncertainty.
Apart from the confusion over the rate for the proposed municipal solid waste tax and the bands for the Consolidation Tax, which were set at one level but  later amended by a statement from  the Inland Revenue Department,  there were also promised changes  to the VAT rate for accommodation in the hotel sector and on Direct Tourism Services (DTS) from 17.5 per cent  to 7.5 per cent.
Discussions ongoing
It has since emerged that despite  some concerns about the legality  of a Minister of Finance “reducing”  a tax rather than raising a tax as is  lawfully permitted, the new VAT rate  for hotels has been implemented,  while discussions were said to be ongoing with stakeholders on the specific services to be included in the DTS.
Further, since those issues surfaced and were ventilated in the media, other stakeholders in the hospitality sector complained that the Budget had promised that from September 1,  the bound duty rate on heavy (cooking) cream, used across the sector, would be reduced in line with the common external tariff rate of 40 per cent observed by CARICOM.
Earlier this month, one irate operator told me the Customs and Excise Department had informed them that  it had not received any official information or instructions from the Ministry of Finance on a new rate,  which meant that the businesses were still paying the old rate and, unfortunately, they did not have  a choice but to pass on that expense  to customers a mere weeks before  the start of the winter tourist season.
In the distant past, such matters involving errors and/or omissions  in the annual Budget statement  were usually dealt with via the appropriate amendments in the House, but more recently, we have seen  the use by successive administrations  of validation acts, purporting to make legal, retroactively, what was illegal.
This issue resurfaced this year primarily in relation to the VAT rates and the Consolidation Tax.
While people who would benefit  from a lowering of the VAT from  17.5 per cent to 7.5 per cent would obviously be loath to look a gift horse in the mouth, some have expressed concern about the Minister of Finance reducing  a tax, when under the law, the power relates only to the introduction  of a new tax or raising the rate of an existing impost.
It is an issue that has been raised within recent times by prominent commentators, notably former Deputy Speaker Ezra Alleyne and trade unionist Caswell Franklyn.
Taxing power
In an April 18, 2008 column, Alleyne insisted that only Parliament has authority to exercise taxing power,  under Section 48 of the Constitution,  by virtue of which it “may make laws  for the peace, order and good government of the country”.
“The Provisional Collection  of Taxes Act Cap. 85 of The Laws  of Barbados makes one exception  to the exercise of the taxing power,” Alleyne said, “to accommodate Budgetary proposals ‘made in the House  of Assembly’ (his emphasis).
“It provides that the Minister of Finance, in a budgetary proposal,  may increase the rate of an existing tax, from any date specified in the budgetary proposal . . . . In any event, the Provisional Collection of Taxes Act gives no (his emphasis) power  to the Minister of Finance to remove (his emphasis) any tax . . . . ”
“That section (3) says that (1) where the imposition of a tax or 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 proposals, the imposition  of such tax shall be as effective as if  an enactment had been made or passed and the tax specified shall be payable as from such date.
“The section goes on to say that if  a bill relating to such tax increase is not presented to the House of Assembly within four months from Budget Day then the tax increase shall cease.”
More recently, Franklyn’s concerns extended to the use of validation acts.
“Put another way,” he said,  “Parliament would be imposing taxes retrospectively which is forbidden  by the Constitution. Section 16 of the Constitution is supposed to protect citizens from the deprivation of property, except by or under the authority  of a written law. (It is well established  by the Courts that money is property). No written law would be in place  when the budgetary proposals expire  in four months, so Government would be acting illegally to collect taxes.”
It would help all of us if when the minister corrects his errors he also addresses these critical issues.
• Albert Brandford is an  independent political correspondent. Email [email protected]

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