Jun 07, 2014 News
…to repeal discriminatory tax laws – Dr Luncheon
By Gary Eleazar
The Guyana Government is yet to pay the US$6M fine that the Caribbean Court of Justice (CCJ) had ordered be paid to a Surinamese company, Rudisa Beverages.
This was confirmed by Head of the Presidential Secretariat, Dr. Roger Luncheon, during his weekly post Cabinet press briefing this past week.
He also announced that Government will be returning to the House with an amendment to the Customs Act which had caused the court case in the first place.
Rudisa had taken Guyana to court over the environmental tax imposed under the Customs Act requiring that a $10 tax be paid on each bottle of imported beverage into Guyana.
The Company argued that it was discriminatory and a breach of the Revised Treaty of Chaguaramus and the CCJ agreed.
Dr. Luncheon during his press engagement, whilst agreeing that the tax was discriminatory, confirmed that it was still being charged given that “the law is the law.”
According to Dr. Luncheon, in wake of the CCJ ruling that so adversely affected Guyana and, “in the context of the denial by the opposition of being responsible for such an outcome”, Cabinet has reiterated its intention to have the once disapproved Customs Amendment Bill resubmitted for the House.
He noted, too, that the focus of the Bill on addressing Guyana’s treaty obligations should not be diverted or confused with other issues such as the Environment.
Dr. Luncheon stated that the sole purpose of the once disapproved Bill is to correct the discriminatory nature of the tax laws with regard to obligations under the revised Treaty of Chaguaramas.
He noted that work is being done currently with a specific mindset, the law is the law and the tax law currently includes the discriminatory feature that still has to be enforced until such time that it is repealed.
According to Dr. Luncheon there are some looking for administrative ways for avoiding the collection of the tax but that would be inconsistent with the law and whoever makes such a decision to not collect the tax, may very well face the wrath of the law.
This, he said, underscores the urgency of the return of the once disapproved Bill at the next sitting of the House.
Following the ruling Attorney General, Anil Nandlall, said that the Guyana Government will have to return to Parliament to amend the discriminatory Environmental Tax which recently caused the CCJ to award a judgment in the favour of the Surinamese company, Rudisa Beverages. The court awarded US$6M to be paid by the Guyana Government.
Guyana passed the Act in 1995 permitting the Guyana Revenue Authority (GRA) to charge a tax of $10 on each bottle of the drink imported into Guyana.
Nandlall said that in 1995 when the law was introduced, it was not discriminatory but this changed when the Caribbean Community (CARICOM) revised the Treaty of Chaguaramus.
He said that this was the case across the region in that, several other countries also had to amend their laws to be compliant with the revised treaty.
According to Nandlall, when the Guyana Government moved to the Parliament to amend the law, it was shut down by the political opposition.
The CCJ ruled in Rudisa’s favour, citing that it had to honour its treaty obligations and ordered that the claimants are entitled to repayment.
Rudisa argued at the CCJ that the legislation violated the trade policy contained in the Revised Treaty of Chaguaramas, in particular the free movement of goods and the prohibition on import duties on goods that are of CARICOM origin.
Both Guyana and Suriname are members of CARICOM. Rudisa, through CIDI, has been in Guyana since 2007.
According to the CCJ, in its judgment, Rudisa’s application was based on the provisions of the Customs Act of Guyana which imposes an environmental tax on all imported non-returnable beverage containers. The legislation does not contain any exemption in relation to CARICOM goods.
The Surinamese company claimed that no similar tax is imposed on local producers of non-returnable beverage containers and, by the definition of “Import Duties” laid down in the Revised Treaty of Chaguaramas, the levy must be regarded as an import duty.
The issue of the environmental tax was first raised with the Council on Economic Trade and Development (COTED), the trade arm of CARICOM, by the Government of Suriname in a series of meetings spanning the period 2001-2012.
COTED concluded that in so far as it applied to CARICOM goods, the levy was in breach of the Treaty which governs how the member countries would operate in a trade environment.
Guyana, in turn, committed itself to take the necessary action to eliminate the discriminatory effect of the environmental tax.
The Government of Guyana brought legislation to the National Assembly in 2013 to amend the Customs Act but the proposal was rejected.
The claimants filed an application with the Court alleging that the imposition of the environmental tax is a breach of the Treaty.
They argued that the tax is inconsistent with CARICOM trade policy which provides for the free movement of goods and prohibitions on the imposition of import duties on CARICOM goods.
According to CCJ, Guyana had admitted that the tax is inconsistent with their obligations under the Treaty but notes that the Government has proposed legislation to rectify the discriminatory effect of the environmental tax, but the proposed amendment was rejected by the National Assembly.
The government also argued that the aim of the legislation is environmental protection, which is a fundamental right under the Constitution of Guyana.
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