Qc Pledges Constitutional Challenge To The Vat Bill
By NEIL HARTNELL
Tribune Business Editor
nhartnell@tribunemedia.net
A well-known QC yesterday said he is mulling whether to challenge the Government’s plans to prevent delinquent Value-Added Tax (VAT) payers from leaving the Bahamas before the legislation even becomes law.
Fred
Smith QC, the Callenders & Co attorney and partner, warned that if
the Government succeeded in getting Section 64 in the revised VAT Bill
on to the statute books and enforced it, it would soon seek to apply
similar ‘travel bans’ to defaulters on other taxes.
Arguing
that Section 64 was akin to something “totalitarian dictatorships”
would seek to implement, Mr Smith backed private sector executives who
had warned it violated freedom of movement provisions in the Bahamian
Constitution.
“I
will immediately bring an action for a declaration that it is an
unconstitutional provision in the law,” Mr Smith told Tribune Business,
when asked what he would do if Section 64 was ultimately included as is
in any VAT Act.
“I
might even sue beforehand,” he added. “I am considering suing before it
comes into effect. I call on anyone who believes in freedom and
democracy to protest and oppose this horrible provision.”
As
revealed on Monday by Tribune Business, the new Section 64 in the
revised VAT Bill would allow the VAT Comptroller to prevent delinquent
taxpayers from travelling until they pay off their liabilities in full
or agree a settlement/payment plan that is acceptable.
The
legislation states that persons owing the Government VAT monies “may
not leave, or attempt to leave, the Bahamas for an indefinite or
prolonged period of time” - although it does not attempt to specify the
duration that would meet this criteria.
“Where
the Comptroller has reasonable grounds to believe that a person liable
to pay tax outstanding under this Act may leave the Bahamas for an
indefinite or prolonged period without paying such tax, [the
Comptroller] may] issue a certificate in the prescribed form to the
Commissioner of Police and the Immigration director, requesting the
Commissioner and director respectively to take such steps as may be
necessary to prevent the person from leaving the Bahamas” until due
payment is made, the revised Bill states.
Those
who attempt to flee the Bahamas without making due payment will face
either a $100,000 fine or imprisonment for up to a year.
Section
64 appears designed to prevent foreign owners of Bahamas-based
businesses, as well as Bahamians, from running away from their VAT
liabilities, but it could well spark legal action of the kind promised
by Mr Smith.
Analysing
Section 64’s impact as is, Mr Smith said; “Every Bahamian, permanent
resident, work permit holder, and their children and families, can be
stopped at the border and prevented from travelling - to go on vacation
or conduct business - simply because it is alleged that they owe VAT.”
This,
he added, was exacerbated by the “vagueness” of the ‘indefinite or
prolonged period of time’ wording, and the QC added: “There are no rules
or boundaries, and excess and abuse will reign supreme.”
And
Mr Smith quickly warned that, if it was successful under VAT, the
Government would likely extend the ‘travel ban’ to cover defaulters on
other taxes.
‘The
idea of being able to stop people from travelling because of alleged
arrears of taxation under VAT means the Government can extend this to
arrears of real property tax, National Insurance Board contributions,
Customs Duties and real property taxes,” Mr Smith told Tribune Business.
“If
this legislation applies to one tax, it can apply to any tax, and this
kind of dictatorial approach to government will make Bahamians prisoners
in their own country. If this clause is permitted to stand, each
successive government will extend it to every form of taxation.”
Mr
Smith added that Section 64 would effectively make Bahamians and
residents “slaves of the taxman, who will be judge, jury and executioner
all in one.
“Once they stop us from travelling, does that mean they’ll take us into custody until we pay the taxes? Where will it end?”
Mr
Smith added that the Bahamas appeared to be “going backwards as a
democracy, instead of forwards”, and warned that freedoms were often
eroded by stealth, one stage at a time, if governments were allowed to
get away with the first move.
Gowon
Bowe, the Tax Coalition’s co-chair, told Tribune Business earlier this
week that the restriction contemplated by Section 64 would likely
violate constitutional rights relating to a person’s ability to move and
travel freely.
He
added that it had been “a sticking point” in the initial November 2013
draft legislation, and had now been ‘broken out’ and stated more
explicitly in the revised legislation tabled in the House of Assembly
last week.
And
Mr Bowe, a PricewaterhouseCoopers (PwC) accountant and partner, said
imposing restrictions on a person’s ability to travel should be the sole
preserve of the judiciary and Bahamian court system, not a tax
authority such as the proposed VAT Department.
“I
am not sure that will stand constitutionally. It would run against
movement and free movement,” Mr Bowe told Tribune Business.
“The
focus should be on prosecuting those individuals, with their ability to
travel restricted only by the courts. That should be purely a court
function; that shouldn’t be the ability of the tax authority to restrict
a person’s movement.”
Suggesting
that the focus should be on prosecuting VAT delinquents, not taking
away their travel and movement freedoms, Mr Bowe said the world was “too
much of global society to impose something as outdated as that”.
August 01, 2014