Of all the serious questions raised about President Jagdeo’s “acquisition” of acres of land at Pradoville 2, Attorney-at-law Mr Jerome Khan (‘President Jagdeo is not liable to pay capital gains tax after selling his house in Pradoville 1’ Stabroek News, February 15) has chosen to join issue on whether or not the President is liable to pay income tax under any circumstances.
Mr Khan’s entry in the minefield of revenue law with some constitutional implications is welcome and his reminder to readers about section 66 of the Tax Act Cap 80:01 is useful. However, his bold attempt to defend Mr Jagdeo in the absence of any attack and his description of excessive and possibly unlawful benefits as “protection of the law” may be excused as convenient and self-serving, even opportunistic to the point where Mr Khan ignores the basic distinction between what lawyers refer to as a sword and a shield. The constitution’s principal shield for the President is provided under the immunities article (Article 182) and with respect to income, only that it cannot be reduced to the holder’s disadvantage (Article 222 (3)).
Mr Khan’s reliance solely on section 66 of the Tax Act and his certainty about how the courts of Guyana and the Caribbean Court of Justice would rule in a matter that at best involves the thorny issue of a conflict of laws presumes too much and would hardly come from an experienced attorney-at-law. His letter completely ignores Section 13 of the Income Tax Act which exempts from income tax only “the official emoluments [emphasis mine] received by the President both when in and when absent from Guyana.”
In his forays into revenue law, Mr Khan should know that the Tax Act in its many incarnations preceded the Income Tax Act, which was first introduced in this country in 1929. Why would a court ignore the argument that the provision was in respect of known taxes at the time, particularly since under each subsequent Tax Act – Income, Capital Gains and Property – the law specifically addressed presidential exemption. Mr Khan may also note that the long title of the Tax Act is ‘An Act to consolidate the enactments relating to the imposition of taxes for the public use in Guyana.’ He would know too that there have been twenty-one amendments to Section 13 of the Income Tax Act and not a single one sought to exempt from income tax, income other than the official emoluments of the office holder.
Is Mr Khan suggesting that the parliamentary draftsmen, the attorneys general, the ministers of finance, the National Assembly and the president who assents to all acts including amending acts, did not know about the qualification in Section 13? And is Mr Khan aware that the President pays VAT on his purchases of standard rated items in the absence of a specific exemption in the Value-Added Tax Act?
Tax exemption for the head of state has a particular history and context. It derives from our colonial days when the governor’s ‘official emoluments’ paid by the British government had to be specifically exempted for two reasons. The first was that since the office or employment was exercised in British Guiana the income would be taxable here, regardless of where paid. Second, since the emoluments accrued to a person who was considered resident and domiciled in the UK, under their laws it was taxable there. In other words, the income was taxed but not in Guyana.
Ethically minded individuals assuming high political office usually place their personal assets in what is referred to as a blind trust, and studiously abstain from business deals while in office. Lawmakers make certain assumptions about the character of the holders of high office and would hardly contemplate a president being willing to stretch the laws.
But let us for a moment assume that Mr Khan is right: to exploit a loophole in the tax laws for one’s benefit is to engage in tax avoidance – something that Mr Khan as an attorney seems to be advising gratuitously but which Mr Jagdeo as President should resist. And as for Mr Khan’s pronouncements about motive and intent in the Pradoville 1 transaction, Mr Khan may wish to refer to what are called in tax laws the ‘badges of trade’; to the inferences from which motives can be drawn; and to the whole body of relevant case law which I think would be outside the scope of a letter to the editor.
I hope Mr Khan appreciates that this is not some technical issue about conflicts of laws but one of a political culture where a person operates outside and above of the law. It is about the rule of law and the equality of persons before the law. I would borrow his own words and state that I have no doubt that as taxpayer, former politician and now practising attorney-at-law, Mr Khan would agree with me on these and on the improprieties surrounding Mr Jagdeo’s property transactions. In fact the judges of the CCJ would find interesting a ‘lawless’ and unique set of laws while Mr Khan may find his confidence that that court would give him unqualified support completely misplaced.