Revenue raid: Should taxpayers have rights?

Everald Dewar, Contributor

In the 1968 science-fiction film 'Planet of the Apes', an astronaut, Taylor, and his crew crash-landed on a planet in the distant future.

In what Taylor described as an 'upside-down world', apes are the dominant specie. Taylor was captured and an inquiry ensued where he was brought before a tribunal. He is defended by Dr Zira, a chimpanzee psychologist and veterinarian who specialises in the study of humans.

Dr Zira: "At the very least, this man has the right to know whether there's a charge against him."

The prosecutor (Dr Homorius): "Objection! This exhibit is indeed a man; therefore, he has no rights under ape law".

Looking at the recently amended Revenue Administration Act 2013, one is left to draw the same conclusion about the rights of taxpayers as Dr Homorius did about humans.

Tax evasion exists and must be subject to public disapprobation, and it is also necessary to have policing to detect the minority who endeavour to break the law by evading tax.

The amended Revenue Adminis-tration Act is supposedly the efficient machinery that will detect and deter tax evasion. The legislation went through Parliament without a whimper from the professional bodies. Its effects, and whether this proves to be just a bad law, are yet to be seen.

Prior to the 2013 amendments, in matters involving tax evasion or serious tax fraud, the commissioner general of Tax Administration Jamaica (TAJ) could apply to a judge in chambers for an order to obtain information from third parties.

disclosure of information

As the law stood then, there were certain elements that had to be in place if the disclosure of information were to be allowed by the court.

The judge has to be satisfied that the taxpayer was first consulted and did not cooperate with the request. A warrant could then be obtained to, with the assistance of the police, forcibly enter on premises, search persons and remove records.

Prior request is no longer; the authorities can now go directly to the judge (ex-parte) for a production or inspection order.

The commissioner should thus be able to gather detailed information of a general nature from banks and other financial institutions and also from 'any person' with whom the taxpayer does business or not. These powers override and take precedence over secrecy provisions imposed by other laws.

Stiff fines or imprisonment are also imposed on persons who fail to provide information requested or give inaccurate or incomplete information.

Of course, if the offence is committed by a company, then the directors or other similar responsible officer will be liable as if they had personally committed the offence.

Our self-assessed system is based on acquiescence, that is, the taxpayer accepts the burden of taxation for the better good. In essence, denying him the right to be heard, before acting and without his acknowledge, is not only contrary to the principles of the social contract but is inimical to being a willing participant in the national agenda for growth.

Without safeguards to protect citizen's privacy, this is opened to abuse, we cannot tell the harm that could come to individual liberty or the ruins it may inflict businesses.

Nothing here, of course, is supporting in any way tax evasion or the underground economy. What is supported, however, is reasonable protection for any taxpayer, guilty or not, who is being investigated by the taxing authorities and that the authorities do not get the power to be able to act as police, prosecutor, judge, jury and executioner.

This writer was in the gallery at Gordon House during the debate in the Senate on the revenue administration bill and got the impression that the members of the Upper House have, in general, almost little care of the effects of the fiscal measures which are put to them and which they are prepared to pass into law.

Set aside the need for passing the IMF test, there is only one condition on which the treasury ministry can excuse itself for having piloted a bill, which contains the clauses such as Section 17G of the act, and that is, it is able to demonstrate to the Parliament that there would be no alternative to the infringement that clause imposes on the personal rights of the citizenry.

Pointing to similar provisions in other jurisdictions is no excuse. Is Jamaica to become a totalitarian state?

It probably will if the tax authorities were to exercise the enormous powers effected under the amendments.

Everald Dewar is senior taxation manager at BDO Chartered Accountants in Kingston. everald.dewar@bdo.com.jm