CCJ ruling forces Guyana Govt. to amend environment tax law

Jun 21, 2014 News

---

By Gary Eleazar

A recent ruling by the Caribbean Court of Justice (CCJ) has forced the hand of the Guyana Government to again attempt

to amend the Customs Act in order to remove a discriminatory environmental tax.
The discriminatory tax recently caused the CCJ to award a judgment in the favour of the Surinamese company, Rudisa Beverages.
The court awarded US$6M to be paid by the Guyana Government.
On Thursday, Minister of Finance, Dr. Ashni Singh, tabled the Bill which had previously gained the attention of the House but languished since the political opposition had requested time to consult with private stakeholders.
Under the current legislation each bottled beverage imported into Guyana attracts an Environmental Tax of $10.
The proposed legislation will now see a $5 tax on all bottled beverages imported and locally produced.
According to the Explanatory Memorandum accompanying the Amendment Bill, it seeks to amend the section in the 1995 Customs Act which imposed an Environmental Tax only on taxable goods imported into Guyana.
Taxable goods under the law refers to every unit of non-returnable resin, metal, plastic, glass containers containing any alcoholic beverage or non-alcoholic beverage, cardboard containers having been removed from the list of taxable goods by virtue of the amendments.
Under the proposed law, a person liable under this section to pay tax, who fails to do so, shall be guilty of an offence and shall be liable to a fine of $5,000 and, in addition, shall pay to the Commissioner-General of the Guyana Revenue Authority (GRA) twice the amount of tax payable.
Guyana passed the Act in 1995 permitting GRA to charge a tax of $10 on each bottle of the drink imported into Guyana.
Attorney General, Anil Nandlall, recently explained to this publication that in 1995 when the law was introduced, it was not discriminatory but this changed when the Caribbean Community (CARICOM) Revised the Treaty of Chaguaramus.
He said that this was the case across the region in that several other countries also had to amend their laws to be compliant with the revised treaty.
According to Nandlall, when the Guyana Government moved to the Parliament to amend the law, it was shut down by the political opposition.
The CCJ recently ruled in Rudisa’s favour, citing that it had to honour its treaty obligations and ordered that they are entitled to repayment.
Rudisa argued at the CCJ that the legislation currently in place in Guyana violated the trade policy contained in the Revised Treaty of Chaguaramas, in particular the free movement of goods and the prohibition on import duties on goods that are of CARICOM origin.
Both Guyana and Suriname are members of CARICOM. Rudisa, through CIDI, has been in Guyana since 2007.
According to the CCJ, in its judgment, Rudisa’s application was based on the provisions of the Customs Act of Guyana which imposes an environmental tax on all imported non-returnable beverage containers. The legislation does not contain any exemption in relation to CARICOM goods.
The Surinamese company claimed that no similar tax is imposed on local producers of non-returnable beverage containers and, by the definition of “Import Duties” laid down in the Revised Treaty of Chaguaramas, the levy must be regarded as an import duty.
The issue of the environmental tax was first raised with the Council on Economic Trade and Development (COTED), the trade arm of CARICOM, by the Government of Suriname in a series of meetings spanning the period 2001-2012.
COTED concluded that in so far as it applied to CARICOM goods, the levy was in breach of the Treaty which governs how the member countries would operate in a trade environment.
Guyana, in turn, committed itself to take the necessary action to eliminate the discriminatory effect of the environmental tax.
The Government of Guyana brought legislation to the National Assembly in 2013 to amend the Customs Act but the proposal was rejected.
The claimants filed an application with the Court alleging that the imposition of the environmental tax is a breach of the Treaty.
They argued that the tax is inconsistent with CARICOM trade policy which provides for the free movement of goods and prohibitions on the imposition of import duties on CARICOM goods.
According to CCJ, Guyana had admitted that the tax is inconsistent with their obligations under the Treaty but notes that the Government has proposed legislation to rectify the discriminatory effect of the environmental tax, but the proposed amendment was rejected by the National Assembly.
The government also argued that the aim of the legislation is environmental protection, which is a fundamental right under the Constitution of Guyana.

---

---