This week in the Senate

This week in the Senate

In this week’s Senate meeting there were several Bills passed, including the Cybercrime Bill, an amendment to the Treasury Bill Act, the Land Tax Amendment, and more. While the Wednesday, September 30, sitting was possibly the last for this session of Parliament, there was no absence of the conventional miscellany of interventions from the various Senators, who all punctuated the day’s work with convivial farewells. Genial sendoffs were especially aimed Business Senator Mark Lizarraga who indicated that this was his last stint in the Upper House.

Land Tax Amendment

The Land Tax Amendment was worthy of special notice by the business community largely due to the fact that for all intents and purposes the remedies sought to be achieved via the amendment already, in our view, exists under the present Land Tax Act. While the current section 28 does limit the Minister’s powers to remit taxes in instances where “any cultivated crops or any dwelling houses or other buildings have been destroyed, or any grievous damage thereto has been sustained through an act of God, invasion, civil commotion, fire or other over-whelming force”, the Minister already has access to the Principal Act’s section 30 which states:

“Whenever it is brought to the notice of the Commissioner of Lands and Surveys that any owner of land is in indigent circumstances and unable pay the tax or any part thereof, the Commissioner of Lands and Surveys shall submit to the Minister a statement of the case in which he shall give the name of the owner of the land, the amount due from him for tax, a description of the land and any evidence of the poverty of the owner or his inability to pay the whole or part of the tax. … (3) The Minister may institute such further enquiry as he considers necessary and remit the whole or part of the tax due or allow time for the payment or may make such other order as he thinks fit.”

Of course, the law itself doesn’t define “indigent circumstances”; however, it is not difficult to surmise that it speaks to land owners who have suffered any economic hardship the likes of which that challenges their ability to make payment. Section 30 also calls for “evidence of the [land owner’s] inability to pay the whole or party of the tax”. This hints to the fact that the original drafters of the law found it sensible to provide remissions to those who need it, while being sure to avoid easing those land owners who can.

The interventions by both Senators Lizarraga and Osmany Salas cautioned on the fact that the section 28(b) amendment to the Land Tax Act “can” be abused contrary to the spirit of the original section 30 of the Act. The proposed new language reads:

“The Minister may remit taxes in whole or part, including any arrears and interest, in the case of any disaster as follows–

(a)     a hurricane, other act of God, invasion, civil commotion, fire or other occurrence which causes any destruction or grievous damage to cultivated crops or any dwelling houses or other buildings; or

(b)        an infectious disease which causes economic hardship in the country of Belize, notwithstanding there is no physical destruction or damage to property.”

While the likes of the Coronavirus Disease 2019 (COVID 19) has undoubtedly caused economic hardship “in the country of Belize”, it is not necessarily a fact that all land owners have suffered economic hardship á la the spirit of section 30.

Now, it must be said that the incumbent Minister “may” indeed have all intentions to only use this discretionary power to the benefit of those land owners who are “genuinely” unable to pay. However, that does not negate the concern that a future Minister—faced with similar circumstances as the present “Great Lockdown Recession”—may take advantage of the “open door”.

Additionally, with all the extra and necessary borrowings that the Government of Belize (GoB) had to undertake due to the present pandemic-induced recession, the government needs ever penny and cannot afford to ease land owners who would not have otherwise satisfied the Section 30 criteria.

Treasury Bill Act Amendment

This latter point becomes especially important considering that support was provided by the Business Community for Treasury Bill Amendment which effectively raises the ceiling on the amount of Treasury Notes outstanding at any one time. The original language of the law reads: “The principal sums represented by any … Treasury Notes outstanding at any one time shall not exceed in the aggregate…one billion dollars”. This, however, has been raised in the present amendment by $200 million to $1.2 billion.

Recognizing the potential need for further borrowing by both the incumbent and future administrations tackling COVID 19 and its associated recession, an amendment of this nature was long anticipated. For instance, at the start of this Fiscal Year, the Prime Minister’s Budget Speech reported total T-Notes at $770 million. As of July 2020, Central Bank of Belize (CBB) data placed that figure closer to $880 million—roughly $120 million shy of the present threshold.

Given the impending General Election, it is expected that in short order Parliament shall be dissolved in accordance with the Constitution. Once dissolved, the government would lose its ability to amend this or any other law. Of course, while section 84 of the Constitution does allow for emergency sessions to be called by the Governor General, it is only logical for the ceiling to be raised prior to the dissolution because apart from COVID 19 relief measures to households and businesses it must be recalled that Belize is still two months away from the conventional close of the Atlantic Hurricane Season.

Of course, any amount borrowed must be repaid, and in an environment where public sector salaries remain at 100%, the government—as was said above—cannot countenance even the slightest hint of excusing land owners from paying taxes that they can afford.