Dear Editor,
I note the response by Mr. Godfrey Statia, Commissioner General, to my letter questioning the power and the authority of the Minister of Finance to issue Regulations under section 105 of the Income Tax Act exempting from income tax the retroactive percentage increase for 2019 for Government employees/public servants, etc.
Let me state at the outset that I have interacted with Mr. Statia since the eighties and have admired his performance, currently in one of the most difficult jobs in Guyana. I have stated publicly that on the occasions on which Mr. Statia does not operate within the letter of the law, he most often does so in a manner that favours the taxpayer. For this reason, while he and I often argue on taxation matters in the course of our respective functions, I would not engage in an adversarial exchange with him in public or engage in point-scoring.
I therefore reluctantly and respectfully disagree with him on the matter of the exemption from taxes of the payment of retroactive remuneration (for which he accepts responsibility) using as authority section 105 of the Income Tax Act. Unfortunately, Mr. Statia’s letter referred to but did not reproduce the text of section 105 which states as follows:
“The Minister may make regulations, subject to negative resolution of the National Assembly, to provide for the remitting wholly or in part of the tax payable by any person or category of persons on such income, in respect of any year of assessment, and in accordance with such conditions as may be specified in the regulations.”
In the tax world, there is an ocean of difference between exemption and remission, the first being that the income is not subject to tax and therefore the question of “tax payable” does not arise. On the other hand, the term “remission” means forgiveness of a tax which is due and payable but for which Parliament has granted some power to a designated authority to that under certain circumstances, to forgo and forgive it because it would be unjust to pursue the taxpayer.
Put another way, there is a charging section which imposes the tax but which excludes any exempt income, thereby setting up a liability which is discharged by payment or remission. In fact, section 6. (1C) the Financial Administration and Audit Act states as follows:
(1C) The Minister may make regulations or other subsidiary legislation to release the taxpayer under the procedure and conditions specified therein in whole or in part from the liability to pay tax otherwise due in cases where the taxpayer’s ability to pay tax due has been affected by natural disaster, disability, mental incapacity, or death, or if the taxpayer has been rendered homeless or destitute.
To have a remission one must first have a liability which is impossible if as the Regulations state, the income is exempt.
Finally, I note with some amusement that a letter published today makes headline news in the Chronicle of the same day! Beat that for promptness.
Yours faithfully,
Christopher Ram