The implications of the CCJ’s recent decision

May 11, 2014 Features / Columnists, Peeping Tom

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The chickens have finally come home to roost. Guyana was always courting disaster with the application of its environmental tax. It had for over ten years ignored the concerns expressed over that tax.
When it did try to address some of these concerns, the combined opposition vetoed the legislation that would have allowed the environmental tax to become non-discriminatory against foreign producers and importers.
The government now has to find over a billion dollars to refund to a Surinamese company. This is the ruling of the Caribbean Court of Justice (CCJ) against the Guyana government, following a challenge brought by the Surinamese company against Guyana’s environmental tax.
The government will blame the combined opposition. They will contend, with some merit, that when they recently attempted to make this environmental tax non-discriminatory by having it applied to local manufacturers, the combined opposition  used its parliamentary majority to strike down the legislation.
The CCJ made it clear that it was not accepting the excuse about the failure to pass the amendment in the National Assembly. They have correctly asserted that the State is indivisible. An obligation on the part of the State therefore cannot be exempted on the grounds that the attempts of the government are being frustrated in the National Assembly.
This argument about the indivisibility of the State should be a forewarning about what it should expect when the Caribbean Financial Action Task Force (CFATF) meets to decide what to do about Guyana’s failure to bring its anti-money laundering and countering of the financing of terrorism laws in compliance with the requirements of CFATF.
The patience of CFATF is wearing thin. It is not going to hold off much longer in reporting Guyana as non-compliant. This will mean sanctions by the international community. The effects of these sanctions will make the US$6M that Guyana now has to pay to that Surinamese company as a result of the CCJ judgment seem like chicken feed.
If the combined opposition had passed the amendment to the environmental tax laws, Guyana may have avoided such a harsh judgment from the CCJ. Guyana got off with a slap on the wrist when it was challenged in the CCJ by a cement conglomerate after it had waived a tariff on the importation of cement from outside of Caricom. This waiver disadvantaged the regional cement conglomerate.
The CCJ, however, did not penalize Guyana with any hefty fines then. It allowed it to put its house in order.
When it came to the environmental tax, Guyana did not put its house in order. This time was not as lenient. The CCJ ordered that it repay the amounts that were collected from the Surinamese company.
This tax has been on the books for over twenty years. The government has consistently ignored concerns expressed that it was discriminatory against foreign producers because it was applicable to imports and not to local manufacturers.
After more than ten years of complaining, the government finally decided to bring legislation to amend the tax to allow it to be applied to local producers. When the amendment came before the National Assembly, the combined opposition did not realize the implications of their non-support of this legislation. They probably thought they were safeguarding the national interest by shielding local manufacturers from having to pay the environmental tax.  That decision may have contributed to the fact that taxpayers now have to find one billion, two hundred million dollars and counting to pay to a foreign company, because Guyana could not argue the mitigating circumstances by pointing out that it had put its house in order.
Guyana has to decide whether it will pay this judgment made by the CCJ. As a member of the CCJ, Guyana is morally and legally bound to do so. But recently it was pointed out that the CCJ cannot enforce its decisions, since there is no enforcement mechanism within the CCJ. Despite this, Guyana is morally and legally bound to pay the judgment, and it should do so.
Can Guyana appeal the decision? It cannot. The CCJ is Guyana’s final Court of Appeal. But even if there was a body to which an appeal could have been made, what will be the grounds of such an appeal?
Where will it find the money to pay the judgment? It does not have to find the money. It can offer alternative concessions to the Surinamese company to offset the judgment. This is something that is outside of the remit of the CCJ and will have to be negotiated by the government with the foreign company.
In the meantime, the clock is ticking on Guyana’s non-compliance with CFATF provisions. Guyana should not expect anything other than serious sanctions if it fails to meet this month end’s deadline.
(To be continued)

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