Against strenuous objections from a member of the Upper House, who labelled changes to the Income Tax Act “unconstitutional”, senators approved the amendments this evening.
Opposition Senator Caswell Franklyn took issue with the bill’s validation clause, noting that “the provisional collection of taxes gave four months from the date of the budget on June 11 to implement it. After October, according to Section 5, these taxes should cease and money already taken in should be refunded. So you have taken people’s property away without the legal provision to do so. This validation clause is contrary to the constitution.”
Senator Monique Taitt had voiced a similar concern. “My challenge is the satisfaction of Section 3, “Subject to this act the imposition of a tax or increase in the rate of a tax contained in any budgetary proposal, from the date mentioned the imposition should be as effective as if the act has been passed and payable from the specified date. Increase in rate should be effective from the specified date and increases paid from then.
“My problem is with Subsection 2, which states “it shall cease to be payable if act for payment of tax or increase is not enacted in the house within four months of the specified date”. It has now been six months since this measure was mentioned in the Prime Minister’s mini-budget on June 11.”
Senator Lindell Nurse said he disagreed with the practice of backdating laws. “Essentially we are trying to legitimize something which has expired, and I am not in agreement with making laws and backdating them as we are trying to do here”.
He acknowledged, however, that a section had been inserted to cover up any potential oversight in that respect. “So when I saw a validation note in the bill, which said, ‘all taxes paid or collected from the first day of August 2018 until the commencement of this act should be considered paid’, I understood why it was included.”
Several senators expressed concern that some taxpayers would now be placed in a higher tax bracket. Senator Taitt said, “I have colleagues and friends who because of the five per cent increase were put into a different income bracket, so the tax has them geting less money than before. Ideally they should be getting the same thing or a bit more.”
Senator Kevin Boyce added, “I think there should be some sort of tax incentive to those who have been hit with an increased band of payment.” He also called for Government to give timelines as to when these rates should be reviewed.
Senator Nurse was concerned about the fact the “same people, specifically the middle class, are getting hit with the taxes harder than anyone else,” and said since people no longer could claim their credit union savings or savings in a registered retirement savings plan on their tax returns, Government could consider other measures, such as an Education Savings Fund, which in his view would help Government meet its obligation in providing free tertiary level education.
Senators’ main concerns centred on changes that would place a greater burden on middle-income and working class Barbadians who already paid the bulk of taxes.
Senator Franklyn, the bill’s most strident objector, accusing the Barbados Labour Party administration of taking a “scattershot” approach to implementing legislation. “This policy will put a bigger burden on the middle classes and working classes who are getting devastated now, because they will be paying the majorty of the taxes in this country.”
He also claimed that Government would introduce these policies now, only to change them again four years down the road when it was time for General Elections again in the hope that the electorate would have forgotten them by that time.
The Opposition Senator questioned another element of the bill which writes off any outstanding sums owed between 1968 and 2000, as well as waiving any penalties associated with that debt.
Senator Franklyn, in referring to it as a “friends and family agreement,” countered, “Let us say you have been living and working here, and owe the Government money. One person pays his taxes every year, while another one refuses to pay. How is this fair to someone who has been paying taxes all along, when the one who did not pay will now benefit? How do you recover the assets of the defaulters, especially if some of those people have since died? To my mind, this is a friends and family amendment. If you cannot pay all of the outstanding taxes one time, make an arrangement with the Barbados Revenue Authority.”
But many of Senator Franklyn’s counterparts did not see the amendment in that light. Barbados Workers Union General Secretary, Senator Toni Moore, declared that “If we cannot provide simple answers to where we were over the last five years, how can we expect to provide answers to what happened 50 years ago?”
Said Senator Rawdon Adams: “Sometimes these longstanding debts are hard to ‘chase down’ owing to the amount of time that has passed, and evidence has shown that writing off old debts is beneficial eventually.”
Senator Moore added that Barbados was in urgent need of tax reform, especially in light of new working arrangements in which former full-time employees would possibly be re-hired on a contractual basis.
“Many of us know of situations where governments of Barbados have engaged entities or individuals to provide contracts for services. Government saved money by not having to make the NIS payments or income taxes for these people, but still had a problem tracking whether these individuals met their statutory obligations. Unless we completely overhaul our tax system, we are going to keep revisiting this issue.”