Collections of higher taxes imposed on mobile money transfers,
kerosene, bottled water and cars before parliamentary approval of the
Finance Bill have been declared unconstitutional.
The
Treasury used an alternative law to bring into effect the tax contained
in the Finance Bill on July 1, prompting activist Okiya Omtatah to
contest the higher levies in court.
The Provisional
Collection of Taxes and Duties Act allows the Treasury to collect the
tax billions it would have missed out on as it awaits parliamentary
approval of the tax measures, given that taxes cannot be charged
retrospectively in the event that the Finance Bill is passed after the
effective date of a particular levy.
Justice Wilfrida Okwany said that Provisional Collection of
Taxes and Duties Act (PCTDA) is inconsistent with the Constitution since
it allows imposition of the tax even before Parliament passes the
Finance Bill. The judge noted that only Parliament has constitutional
power to impose tax.
“I wish to reiterate that the
issue for determination before this court is not the constitutionality
of the Finance Bill per se but its implementation, on a provisional
basis, before the Bill is passed into law,” said Justice Okwany. The
judge declared that PCTDA “unconstitutional and therefore invalid, null
and void”. The Treasury is allowed to collect the taxes under the PCTDA
for up to six months — until January 15, 2019 — although the law allows
extension of the period with Parliament’s approval.
Once
the Finance Bill is passed and signed into law, the legal notice on tax
collection guided by the PCTDA ceases to have effect, and any changes
applicable from the newly enacted law apply.
The notice also becomes voided when the National Assembly rejects any sections of the Finance Bill.
Tax
experts said the Treasury’s publication of the notice was meant to
cover the taxman against possible delay in passing the Finance Bill.
Mr
Omtatah yesterday told the Business Daily that any firm or individual
who was charged the said tax during the period can ask for a refund,
signalling that the battle with the Treasury over early duty collection
is not over.
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