Revenue Authority delayed as PSA goes to Privy Council
![People line up to file tax returns at the Inland Revenue Division, Port of Spain. - File photo by Jeff K Mayers](https://newsday.co.tt/wp-content/uploads/2023/06/19443137-1024x716.jpg)
THE Public Services Association (PSA) has been granted conditional leave to take its challenge over the constitutionality of the operationalisation of the Trinidad and Tobago Revenue Authority (TTRA) to the Privy Council.
The union has also been granted a limited stay until September 25.
At a hearing at the Hall of Justice, Port of Spain, on June 4, Justices of Appeal Mark Mohammed, Charmaine Pemberton and Mira Dean-Armorer said it made sense to temporarily preserve the status quo, as it would be conducive to the ease of administration in the public’s interest, while mindful of the administration of justice.
However, the judges made it clear they could not agree to an open-ended extension.
The PSA has three days to approach the Privy Council, after which the Court of Appeal will grant final leave without a hearing.
The State did not oppose the leave application, but only argued against an open-ended stay, citing concerns over any further delay in the operationalisation of the authority, government’s ability to collect revenue and possible downgrades by international credit-rating agencies.
The Revenue Authority Act was proclaimed with an effective date of May 1, 2023, and was scheduled to take effect on August 1, 2023.
However, the PSA, through its member customs officer Terissa Dhoray, challenged the lawfulness of the authority. The lawsuit specifically focused on Section 18 of the legislation, which President Christine Kangaloo proclaimed on April 24, 2023.
Initially, the deadline to do so was July 31, 2023, but there were at least five other extensions, with the last, on April 30, extending the deadline to June 3.
On June 4, Senior Counsel Douglas Mendes, who represents the State, said Finance Minister Colm Imbert intended to grant another extension until the end of June, while the Attorney General had agreed to an undertaking to reverse any of the choices made by public servants if the Privy Council rules the Revenue Authority Act unconstitutional. He argued against a stay being granted.
The PSA’s conditional leave application was filed on May 29, seeking an interim order staying the implementation and operation of section 18 of the Revenue Authority Act, pending the hearing and determination of the appeal to the Privy Council.
On May 28, Justices of Appeal Nolan Bereaux, Pemberton and Dean-Armorer dismissed the challenge, which High Court judge Westmin James initially rejected in November 2023.
The Appeal Court’s unanimous decision gave the Government the green light to proceed to implement the TTRA.
After the Appeal Court’s ruling, the Prime Minister said he instructed Imbert to proceed with plans to fully establish the authority.
In brief submissions on June 4, the PSA’s lead attorney Anand Ramlogan, SC, pressed for the stay, saying he was confident the Privy Council would hear the matter urgently, as it had been poised to do so when the first application for injunctive relief was sought in 2023. He said not to pause the process would be administratively “chaotic and confusing.”
He rejected what he said was the State’s “doom and gloom” story, saying in the meantime, the State can continue to collect taxes, as it has been doing, through the Inland Revenue Division (IRD) and the Customs and Excise Division (CED).
In the lawsuit, Dhoray challenged the constitutional validity of the Revenue Act 2021. Dhoray contended that section 18 was unconstitutional as it sought to interfere with the terms and conditions of employment of public servants currently assigned to the CED and IRD.
The section gave public servants – some 1,200 – three months to decide on their future employment on the operationalisation of the TTRA.
Those affected had the choice to resign from the public service, accept a transfer to the TTRA or be transferred to another office in the public service.
Dhoray also claimed the Government did not have the power to delegate its tax-revenue-collection duties.
In its ruling, the Court of Appeal held that the functions of assessment and collection were not core functions and there was no constitutional infringement in their being delegated to the Revenue Authority.
In his ruling, James ruled that tax collection was not a core governmental function that was non-delegable.
He said the TTRA was “meant to be a semi-autonomous revenue authority.”
Some 249 public servants have already exercised their options to transfer to the authority, while there remain some 863 vacant posts to be filled there.
Imbert: A need for the TTRA
In an affidavit filed on June 3, in opposition to the PSA’s application, Imbert said from 2002 to the present, the Government repeatedly received advice that tax and customs laws, under an administrative and human-resource-management framework, were archaic and rigid, adversely affecting the effectiveness of these laws and serving as a major obstacle to implementing tax administration reforms.
Sources told Newsday unless there was a speedy determination, the term of office of the authority’s current board could expire without its work beginning.
“And we all know the authority can't operate without staff. There is no injunction to prevent the authority from commencing operations, but we don't have staff.
“And with this appeal to the Privy Council pending, it will probably mean that the workers will stay their hands until the judgment. Where does that leave the authority?”
The current board was appointed in June 2022. The chairman and vice-chairman’s terms are for five years and other members, except for the permanent secretary, are there for three years.
In his affidavit, Imbert said, “Needless to say, the authority cannot begin to operate effectively until it is able to start filling the vacant posts.”
He said an interim stay would push back the the deadline for eligible officers to exercise one of the three options and delay the start of operations. He said the Government strongly preferred not to extent the option period beyond June 30.
“The economy of TT is an oil- and gas-based economy, and the performance of the country's economy is heavily dependent on the international price for oil and for gas and the amount of oil and gas that is produced in the country.
“The weighted average price of oil produced in TT has fallen below the projected US$85 per barrel, to $81.04 per barrel, and the netback price of natural gas has been a mere US$3.22 per MMBtu, or 36 per cent below the budget price.
“This significant variance from the budgeted figures is a serious cause for concern and makes the speedy operationalisation of the Revenue Authority even more imperative.”
Imbert said the next three years would be challenging for TT from a revenue perspective.
“In fact, unless additional tax revenue can be collected through the improvements in tax administration that will come with a fully operational Revenue Authority, the Government will soon be faced with very difficult choices in terms of maintaining the current levels of subsidies, grants, free services and social programmes.”
He said the annual tax gap between actual and potential tax revenue was in excess of $5 billion, or as high as $10 billion.
“The Government cannot continue to sustain budget deficits by increasing government borrowings and government debt much longer, and international credit rating agencies have warned that if the Government is not able to achieve fiscal consolidation in the near future the country's international credit rating will be downgraded.”
He added, “In the absence of increased tax revenues in the short term there are two options open to Government in terms of reducing government debt: reduce government expenditure significantly; or withdraw funds from the Heritage and Stabilisation Fund.
“However, both options will or may have adverse consequences and the latter is not sustainable.”
He said to reduce budget deficits, if Government chose to reduce its planned expenditure, would affect its ability to spend, while also reducing the public sector investment programme.
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"Revenue Authority delayed as PSA goes to Privy Council"