The Barbados Bar Association (BBA) is warning that a proposed amendment to the Barbados Revenue Authority (BRA) Act would have “constitutional implications” and would “cause more mischief than it cures”.
In a statement Monday from its president Liesel Weekes, the grouping of attorneys-at-law questioned the constitutionality of sections of the Barbados Revenue Authority (Amendment) Bill 2017 which deal with the conveyance of property. The measure could go before Parliament as early as Tuesday.
According to the provisions of the amendment, all persons natural and juridical, who wish to convey property must first obtain a tax clearance certificate from BRA as evidence that all taxes payable under the Excise Tax Act, the Income Tax Act, the Land Tax Act and the Value Added Tax Act have been fully paid, or that an agreement has been reached with BRA for payment of ten per cent of the assessed tax, with the remainder to be paid by installments.
The BBA said other than the Land Tax Act, taxes due and payable under the other Acts were not charges on land “and ought not to be treated as such”.
Such taxes are personal to the tax registrant and are debts due to the Crown, and there were legal remedies available to the state in the event of default by a taxpayer, it argued.
“The requirement of the tax clearance certificate contemplated by the amendment seeks to treat debts owed to the Crown as first charges on land. It is unclear what mischief this provision seeks to address and whether in its current form it addresses any mischief relative to the transfer of property,” the association said in the statement.
The legal body said a review of the bill had revealed a failure to consider sums that had been assessed by BRA as payable but disputed by the taxpayer.
“This Amendment must have regard for the rights of objection and appeal available to taxpayers under the substantive Taxing Acts. In its current form the Amendment fails so to do.”
In addition, it said the changes to the legislation failed to make “provision for the set off of refunds against tax assessed” similar to that provided in the VAT Act, and sought to “make liable for unpaid taxes third parties to whom those taxes do not relate”.
It asked whether a mortgagee “exercising a power of sale over a property where the owner of that property has failed to pay his income tax or other taxes” was expected to “discharge the mortgagor’s personal income tax liability” and enter into an agreement with BRA for payment of the tax.
It also listed as a “practical example”, the case of matrimonial property where a court has ordered one of the parties to transfer his or her share and interest in that property to the other.
“If the transferring party has defaulted on his/her personal income tax, is the other party to be deprived of the relief ordered by the Court? This cannot properly be the intention of the Amendment but is the effect of the proposed provisions,” the statement said.
“The Bar is also concerned that there may be constitutional implications with regard to the Amendment as it relates to due process as the Amendment appears to seek to extract taxes from registrants without reference to their right of objection to and appeal of the sums assessed to be paid.
“Similar to the attempt to make the obtaining of a professional practising certificate contingent on the possession of a tax clearance which was abandoned, the effect of this amendment will cause more mischief than it cures,” it concluded.