Sensational reporting

Mar 25, 2018 Features / Columnists, Peeping Tom

The local media houses engaged in sensational reporting of the decision of the Caribbean Court of Justice (CCJ) in the case brought by Guyana Stores Limited against the Attorney General of Guyana, the Guyana Revenue Authority and the Commissioner General of the Guyana Revenue Authority.
The Kaieteur News headlines read “Guyana Stores must pay $3.8B to GRA.” The Stabroek News carried two sensational headlines. The first read “GRA wins $3.8B case against Guyana Stores.” The second read “Guyana Stores to get 30 days to pay $3.8B in owed taxes.” Online news source Demerara Waves’ headline read “Guyana Stores Limited loses tax case to GRA at Caribbean Court of Justice.” The Guyana Times, as expected, jumped on the bandwagon. Its headlines screamed, “Guyana Stores ordered to pay $3B in outstanding corporation taxes.”
Each of the aforementioned headlines is misleading. The case before the CCJ was not a case about the amount of taxes owed or required to be paid. The CCJ also did not make an Order for the payment of any taxes.
The CCJ stayed clear of adjudicating on the tax liability of Guyana Stores. In its judgment, the Justices stated, “The Court has not been directed to anything which gives it jurisdiction to review and hear an appeal against a tax assessment; no cause of action arises from this dispute between a taxpayer and the State…with the constitutional challenge dismissed there is nothing for this court to decide.”
The Court made no Order for Guyana Stores to pay any taxes. It simply stated that it was left to the company, the GRA and the State to resolve the dispute as to the tax liability. In other words, the CCJ has refused to pronounce on the taxes owed since what was before it was a constitutional challenge to the 2% turnover tax.
This 2% turnover tax has always been controversial. Arguments about its constitutionality are not new. When the tax was first introduced by former Finance Minister Asgar Ally, concerns were expressed then about its constitutionality. The same line of argument made at the CCJ was expressed then. Back then, it was argued that the corporation tax was a tax on profits and therefore should only be applied where there is a profit; that anything otherwise would amount to depriving a loss-making company of its property.
The 2% turnover tax, it was also argued, by being held as a tax credit where the corporation tax was paid, was thus effectively a loan. The tax was described as an onerous burden in both loss-making and profitable years.
The CCJ did not agree with similar and related arguments made by the appellant, Guyana Stores. It ruled that the 2% turnover tax was not unconstitutional. The CCJ decided only on the merits of the challenge to the constitutionality of the 2% turnover tax.
The sensational reporting of this judgment did an injustice to Guyana Stores. It has stigmatized that company as a tax avoider. At the least, the reports could have explained the background to the alleged tax liability.
Guyana Stores Limited was privatized in 2000. Under the agreement of sale, pre-privatization taxes were supposed to be paid by the State. Yet, the GRA was assessing Guyana Stores for taxes which date back to 1986, fourteen years before the company was privatized.
The $3.8B which is now being flaunted sensationally in the media, involves taxes which are the liability of the State. It also involves taxes for years after privatization, for which the CCJ noted there are pending challenges.
The media has to be more responsible. The decision of the CCJ, in the constitutional challenge brought by Guyana Stores, was published both in summary and in full. There can be no excuse for the sensational reporting of that judgment.

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