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BUSINESS GUARDIAN guardian.co.tt MAY 25 • 2017
Negative fall-out from subsidy removal
I refer to an article in the Business Guardian
dated May 18 in which Antony Wilson lamented
the fact that no one in or out of government
had the testicular fortitude to explain to the
population that it was revenue from LNG that
facilitated the tax-breaks and subsidies of pre-
Wilson added that in the last 10 years
everything including electricity, water, cost
of travel to and from Tobago, in addition to
healthcare have not increased.
The present administration has chosen to
avoid the removal of these subsidies in the
short-run and has, instead, chosen to fund
the fiscal gap of some $6 billion partly from
borrowing, modest draw-downs from the HSF,
sale of some state assets and modest changes in
taxation, no doubt hoping for a soft landing as
it seeks to adjust to exogenous/external shocks
caused by a precipitous fall in oil/gas prices.
This against the backdrop of some 10 months
of import cover (reserves of some $US 8-9 bil-
lion) no doubt figuring that it could afford to
defer such drastic actions as recommended
by Moody's, as it looks for a brighter day, and
determined to avoid the clutches of the IMF.
If government removes the subsidy on water
and electricity, this will drive up prices and
have a ripple effect on the cost of living. If the
subsidy on the cost of travel between T&T is
removed, prices of both goods and services
will rise especially in Tobago.
This general increase in the price level/in-
flation will cause trade unions to call for wage
/salary increases and the vicious circle of rising
prices will continue.
This is the reason why public utilities---such
as water and electricity---are public monopolies
and not private monopolies.
A monopoly implies that there is only one
firm in the industry and, in the absence of com-
petition, can theoretically set a price that is so
high as to exclude large sections of the popu-
lation. This could occur as well, if the market
(supply/demand) is allowed to interact freely.
When a subsidy is imposed, government
enters the market and charges a lower price
(below the market price) to make the com-
modity affordable to the average citizen while
government picks up the tab.
Caveat emptor! Any rise in prices precip-
itated by a general increase in the price level
or any cut in wage/salaries shall have negative
political consequences, as evidenced between
1986 and 1991, when the NAR administration
cut salaries/wages of public employees by 10
per cent and removed COLA. This, together
with a certain amount of arrogance on the part
of that administration was the main cause of
the 1990 coup attempt and its subsequent
demise at the polls in 1991.
Politics and economics could be strange bed-
fellows. Any removal of the subsidy on water,
electricity and inter-island transport, will no
doubt have the effect of improving the govern-
ment's bottom-line (re: closing the fiscal gap)
but shall have serious negative impacts on the
rank and file and will mark the beginning of the
end when general elections 2020 rolls around.
Property tax, forfeiture power
over 100 years old, nothing new
Ihave heard lively discussions, debates
and even passionate arguments over
the implementation of the Property
Tax Act 2009, sometimes intertwined
with observations as to its far-reach-
ing terms or as to the timing of its
What appears to be common ground between
the disputants and, indeed, among landowners
is that there is nothing improper, untoward or
unreasonable in requiring and of landowners
being obliged by law to pay an annual tax in
respect of their ownership of lands.
Public disquiet has been caused by those
opposed to the implementation of the act by
claims that as a consequence of the landown-
er's non-payment of the property tax his land
may be sold or his goods and chattels seized
and sold (distrained upon) or his land forfeited
to the State.
There has even been a fearful reference to a
landowner suffering the fate of his property
being bulldozed under some colour of authority
under the act.
It is against that background it is necessary
to look at the specific provisions of the act to be
informed and not misled as to the full import
of its true terms.
At the outset but for the extravagant claim
of a landowner's property being bulldozed as a
consequence of his non-payment of the annual
tax eligible on his land, I acknowledge that the
act makes provision for all of the other claimed
consequences of the non-payment.
Yet, while the State admittedly is empowered
to employ such processes for the recovery of
the unpaid property tax and interest accrued
thereon, such power is not unfettered but
conditional upon the observance of certain
procedural safeguards to the property owner.
In that regard the Board of Inland Reve-
nue is obliged to send to an owner a notice of
non-payment giving specifically prescribed
information and also before enforcement of
recovery a notice of demand. It is only after
12 months thereof that the power to distrain
Further, the power to forfeit is only exer-
cisable when the tax, accrued interest or part
thereof remain in arrears for a period of five
years and, even so, certain strict conditions as
to the giving of notice to the landowner must
be satisfied before the president in whom the
power resides exercises such power.
Additionally and relevantly the statutory
prescribed measures for recovery of the unpaid
property tax and accrued interest merely reflect
long pre-existing powers of enforcement as
to the recovery of unpaid charges and taxes in
comparable legislation and add nothing new.
By Section 32 of the act any unpaid annual
tax together with interest payable in respect
of any land becomes a charge on it, activates
the power of sale under the Rates and Charges
Recovery Act (Recovery Act) and also becomes
recoverable from the owner by a court action
or by distress on any goods and chattels which
may be found in or upon the land.
None of this is new or peculiar to the act.
The consequence of a charge being created
over lands for non-payment of rates or taxes or
the power to distrain upon goods and chattels
and to sell the goods so distrained upon towards
recovery of outstanding rates and taxes are all
of long standing.
So, too, is the right given in the act to the
person levying distress, to break open any
building in the daytime for the purpose of
levying such distress.
As early as 1914 and by the Recovery Act,
Public Authorities including the WASA and
the Agricultural Development Bank were em-
powered not only to levy distress upon goods
and chattels found on premises in respect of
which rates and charges were in arrears (Section
7 Recovery Act) but also to sell such premises
where the rates and charges remained overdue
for more than three months after becoming
It further provided for the surplus of any
proceeds from such a sale to be paid into the
High Court and for the court at its discretion
to make order for the payment of the whole
or any part thereof to the person(s) entitled.
So, too, the Land and Building Taxes Act (Tax
Act) which was part of our laws since the April
30, 1920 until repealed by the act, also provided
for the levying of distress after three months
after the tax payable on the land becomes due.
It also made liable to distress not only the
goods and chattels of the landowner but also of
any tenant or occupier. Further, unremarkably,
it granted power to the person levying distress
to "if necessary break open any building in the
daytime for the purpose of levying such dis-
tress" (Section 22(3)).
Materially, the Tax Act also provided for
the forfeiture of any land where the tax pay-
able in respect thereof was in arrears for one
year and that such forfeiture was exercisable
by the President and upon the registration of
the President's warrant of forfeiture "such land
shall be forfeited, and shall vest in the State, in
absolute dominion, free and discharged from
all rights, estates, interest, equities and claims
of any other person."
Indeed the provisions of the Tax Act in rela-
tion to distress and forfeiture are almost com-
pletely replicated in the Act so as to amount
to nothing new.
Even further Part V of the Municipal Cor-
porations Act 1990 until repealed by the act
also provided for a corporation to sell rateable
hereditaments that are in arrears towards re-
covery of such rates or to proceed by action in
Court towards recovery of such outstanding
rates or to use the process of distraining upon
the goods and chattels which may be found in
or upon the rateable hereditaments (Section
All this make plain that the act introduces no
new machinery towards the recovery of unpaid
property taxes and accrued interest in arrears
and maintain the same powers of recovery in
existence for some 100 years.
This leads to the obvious enquiry as to why
detractors of the act are not disclosing the es-
sential facts as to the act's safeguards to the
property owner as well as the long pre-existing
powers of recovery for unpaid property tax and
behaving as though the powers contained in
the act are recent draconian visitations upon
It is this lack of disclosure that is the cause in
great measure of the alarm and apprehension
generated by the politicising of the issue.
It may be that those who remain silent on
these salient facts are really unaware of the
pre-existence of the recovery powers in earlier
acts, because if they know and yet deliberately
remain silent that constitutes deceit and they
open themselves up to losing the people's trust.
ERNEST H KOYLASS SC
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