Everald Dewar | Revenue administration tax law seems incompatible with basic rights
A taxpayer was recently served a notice from Tax Administration Jamaica (TAJ) summoning him to a meeting to answer questions.
The notice issued under Section 171A of the Revenue Administration Act (RAA) states that the act imposes a fine of up to $2 million or imprisonment for a term not exceeding one year for failure to comply.
This section of the RAA gives the commissioner general of TAJ powers that can be used on an ad hoc basis. This includes requesting information, focusing on any tax-related action, whether or not he is carrying out an audit.
This power allows the TAJ to summon any person to appear and give evidence about his own affairs or those of another person and that other person, need not be named. The commissioner general may also determine how the responses should be provided.
On seeing fines and imprisonment mentioned in the notice, our taxpayer immediately panics.
However, what the notice failed to disclosed is that such fines or confinements can only be imposed by the courts. It is not automatic and not within the prerogative of the TAJ.
The Section 171A provision is strict in its intent. It basically infringes on one's liberty. Is there no safeguards to protect the taxpayer within the statute, and how can the taxpayer be assured that the TAJ will operate fairly? What remedy is available to him if there is an abuse of power?
We saw where a panel of the 9th US Circuit Court of Appeals recently blocked enforcement of Donald Trump's travel ban that affected several countries. Two states challenged the executive order as unconstitutional and violating federal law. A federal district court preliminarily ruled in their favour.
White House lawyers said that "this is a judicial usurpation of power" and a "violation of judges' proper roles in litigating disputes". On the other hand, the judges hold the view that the "judiciary retains the authority to adjudicate constitutional challenges to executive action".
The RAA is an act of Parliament, but appears incompatible with basic rights. In our present case, under what circumstances can a taxpayer challenge the validity of the tax provision?
Just such an argument was raised in the 1968 case of Cheney v Conn where a taxpayer challenged his assessments of tax liability on the basis that the law contravened international law. The court argued that if the taxpayer was correct he would, in fact, be asking that the supremacy of Parliament be overruled. That is, "what the statute itself enacts cannot be unlawful, because what it says and provides is itself the law".
A judge's duty
Does this means that in the field of statute law, the judge cannot deny the statute and must be obedient to the will of Parliament?
While a judge's duty is to interpret and apply the law, it will be applied in such a way that it conforms to the rule of law. That is, "Parliament must be presumed not to have acted to a higher natural law" and to "legislate so as to prevent arbitrary exercise of power contrary to the rule of law".
As this doctrine takes precedence over that of Parliamentary sovereignty, then perhaps the court can refuse to enforce the 171A tax provision on the basis that it will undermine contemporary morality and the protection of basic rights.
The courts have a sacred role to protect marginalised groups as well as compliant taxpayers against irrational, discriminatory conduct.
Judges ought not to accept the notion that they are simply in office to do Parliament's bidding. Furthermore, as we have seen in the US, there ought to be checks on the powers of the executive to stop them from acting with impunity.
Judges should answer to a higher order.
- Everald Dewar is senior taxation manager at BDO Chartered Accountants in Kingston.