Dear Editor,
The Stabroek News of November 24 reports that Minister of Finance Winston Jordan has published the Income Tax (Special Provision) Regulations to waive taxes on the retroactive wage increases for public servants. While I support increased wages in the public service as a matter of policy, but not politicking and vote-buying, I have to state that not even a President can exercise the power which Mr. Jordan is purporting to exercise.
Only the National Assembly by the passage of primary legislation has the power to make any payment exempt from tax. Such a power has been exercised only twice since 2004 when the relevant law – section 13 of the Income Tax Act – was amended to make the salary of the Chancellor and the Chief Justice exempt from tax. The other instance was an amendment to the section in 2016 to exempt the income of artistes during festivities certified by the Minister of Tourism.
Persons with dictatorial tendencies never can bring themselves to understand that there are limits to their powers and Jordan seems to fall squarely in this group. With even a cursory knowledge of the Income Tax Act for which he has been assigned portfolio responsibility, he would realise that the Act is very specific to the powers which he can exercise by Regulations. Under section 86, he can make regulations regarding the Board of Review and under section 117 he can make regulations for the “carrying out of the provisions of [the Income Tax] Act.”
There is an elementary principle dealing with secondary or delegated legislation that the delegate, in this case Jordan, can only exercise any power consistent with the primary legislation. In fact there is an overriding statutory framework relating to concessions that is even more specific. Among other things, the Financial Administration and Audit Act provides as follows:
(1B) No remission, concession, or waiver of tax (emphasis added) by Order or other subsidiary legislation is valid unless the Act under which the subsidiary legislation is made expressly permits the Minister to provide such a remission, concession, or waiver.
In other words, the Regulations made by Mr. Jordan are invalid which means that any power they purport to exercise or benefit or obligation they seek to impose is illegal.
I am not advocating for the non-payment of the increases but only that they be made within a legal framework. If the Government wants the workers to receive the money net of taxes, then it should gross up the increases. Jordan was Budget Director when I challenged the then Finance Minister on the same issue. I find it hard, and troubling, to believe that he could so easily forget this or recklessly disregard it.
Apart from the illegality issue, one would assume that Mr. Jordan has carried out another part of his duty with knowledge and competence. If he has, then he should have undertaken a careful costing of the proposal for the increases in wages and allowances ranging from 8% to 900%. He should therefore have no problem in telling the taxpayers who have to fund the increase what the total cost of the proposal is and where in the 2019 Budget this is provided for. If he has not done so, then he is guilty of dereliction of duty.
Finally Editor, I wonder whether Mr. Jordan has consulted with the Board and Management of the National Insurance Scheme on the impact which the increases will have on the NIS which on a daily basis struggles to ensure financial and actuarial viability. Mr. Jordan who also has portfolio responsibility for the NIS must surely know that the NIS Act prescribes that the minimum pension paid by the NIS is linked to the Public Sector Minimum Wage. It is estimated that in respect of pensions alone, the cost to the Scheme will exceed $1,000 million.
It is scary to think that in addition to all that the Granger Administration has done to cling to power, it is prepared to violate any law, endanger any institution and bribe any group of voters to help them to remain in power. Inevitably, one has to wonder about the motives.
Yours faithfully,
Christopher Ram
