Tax exemption of judges illegal
By Katende J.K.
The Judicial Commission of Inquiry into Corruption in the Uganda Revenue Authority (URA) led by Lady Justice Julie Sebutinde revealed just a bit of the problems encountered by URA in the administration of tax laws in this country.Suffice not to comment on the commission's findings at this time. We only hope that Justice Sebutinde will highlight serious matters to be addressed by URA, the Ministry of Finance and the legislature in combating tax fraud, nepotism, corruption and incompetence.
Do not mind that the judge herself was caught up in the fracas of taxation when it was revealed that her honorarium is not taxed. A spirited attempt was made by the Commission to exonerate the judge and blame URA for "the fear to tax Sebutinde"
I wish to comment on the illegal tax exemption enjoyed by the judges, which is condoned by Ministry of Finance and other self-seekers. In an effort to justify the illegal exemption on Justice Sebutinde�s Shs 9m monthly pay from URA, critics were told to read Article 128(7) of the Constitution.
I reproduce the said article for your ease of reference:
The salary, allowances, privileges and retirement benefits and other condition of service of a judicial officer or other person exercising judicial power, shall not be varied to his or her disadvantage.
The issue as to whether judicial officers are entitled to exemption on their emolument on the basis of the Constitution is a matter of statutory interpretation and not a constitutional matter, as the judiciary would like to profess.
Article 128(7) of the Constitution does not per se bestow tax exemption as envisaged under the Income Tax Act 1997 under which this case falls. The article simply means that the salaries or emoluments shall not be down ward. The Constitution does provide only for one exemption. Article 106(4) of the Constitution only exempts the President of the Republic of Uganda and I do not think judges claim the office of the presidency of this land!
Article 106(4) re! ads:
The president is EXEMPTED from direct personal taxation on allowances and other benefits except on the official salary.
Still talking about the president, Article 106(6) of the Constitution provides like in the case of the judges as follows:
The salary, allowances and other benefits granted to the president under this article shall not be varied to the disadvantage of the president while he or she holds office.
Their lordships will have to tell this country where in the Constitution it is provided, as it is done for the case of the president above, that they are exempt from tax. In taxation the word vary does not mean exempt.
The word vary should be construed in its natural, plain and ordinary meaning, especially where taxation is involved. As any parliamentary counsel will attest, one of the cardinal principles in the construction of any law is the meaning attached to words, especially when the language is plain and admits to only one meaning. In such cases, the intention of the legislature is best declared.
My sources in the legal fraternity told me that in the case of ARGOS, GUADET VS BROWN, the judge held that "if the words of a statute (Constitution) are clear and unambiguous, they themselves indicate what must be taken to have been the intention of Parliament and there is no need to look elsewhere to discover their intention or meaning. The words and sentences in a statute must be construed in their ordinary and natural meaning. The intention of Parliament cannot be speculated.�
I suppose the delegates were very clear in their minds to exempt only the president from tax under the Constitution. The rest of us, including the bewigged men and women, are subject to ordinary tax statutes (The Income Tax Act). Section 22 of The Income Tax Act 1997, as amended, provides for exempt incomes and persons enjoying such. Judicial officers do not appear. Their emolument is not exempt under the Income Tax Act, or under the Constitution, as explained above. The question you will probably ask, l! ike we a ll did: "How were these judges exempted and who did it?�
On May 9, 1997, by General Notice No. 140 of 1997 carried in the Uganda Gazette, the Chief Justice, Deputy Chief Justice and justices of the Supreme Court, Court of Appeal and High Court were exempted from tax on their emoluments, in line with the Income Tax Decree, which was repealed by the Income Tax Act 1997 in July 1997.
The said General Notice expired on June 30, 1997 and was to be renewed by Dec. 31, 1997, as required by the Income Tax Act like was the case for all such matters under the law.
The minister of Finance did not renew it because the Income Tax Act outlawed such exemption, and he knew it. He could not renew it, he did not renew it! URA religiously enforced this provision on other persons and organisations.
Hence the exemption enjoyed by our justices expired on June 30, 1997! It is time they paid up.
On April 29, 1999, the Secretary to the Judiciary attempted to cajole the minister of Finance to "consider granting exemption to judicial officers from taxes until sometime in future when pay will be substantially increased to cater for such tax deduction." Every body, including the judges, knew that the exemption was a farce.
My source in URA told me reliably that they made a competent interpretation of the illegality of the exemption to the ministry of Justice some time in 1999.
The Solicitor General agreed with URA that Article 128 (7) of the Constitution does not exempt judicial officers from tax. I was shown a copy of the letter from the Solicitor General dated Sept. 2, 1991, conveying the interpretation!
As everybody knows, URA is controlled by the ministry of Finance to the extent that it has continued to direct what to say, do or not do!
Officials in the ministry, wary of keeping their patronage with high circles, have by the stroke of pens, done untold damages to the tax administration in this country.
One such case is the exemption fiasco of the judges. Contrary to the correct legal interpre! tation b y the Solicitor General who is the authority in legal issues in this country, the ministry chose to go native.
The Attorney General is a political appointment hence prone to pleasing those in power. In December 1999, the ministry chose to apply a cabinet decision on this tax interpretation matter while acknowledging that the exemption was illegal! Article 2(2) of the Constitution does not nullify the provision of the income Tax Act 1997 because the Constitution, as already seen, does not provide for exemption of judges.
Having said all these, we now expect Lady Justice Sebutinde and her colleagues to pay up all the unpaid taxes.
If the Commissioner General of URA was not afraid of losing her contract because of annoying the powers that be, we want to know her action on this tax evasion.
Monitor- December 12, 2002 01:23:59
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