High Court declares law exempting Chancellor, CJ from paying tax unconstitutional

The law granting tax exemptions to the Chancellor of the Judiciary and the Chief Justice only, and excludes other Judges of the Supreme Court of Judicature was declared unconstitutional in a ruling rendered on Friday by High Court Judge Fidela Corbin-Lincoln. The effect of this ruling is that all Judges, even the Chancellor and Chief Justice will now be required to pay tax.

The statute is section 13 of the Income Tax Amendment Act, Act No. 7 of 2004. Declaring the law unconstitutional, void, and of no effect, the Judge held that it infringes upon Article 149D  of the Constitution which guarantees every citizen equality of treatment under the law.

Her ruling stems from an application by now-retired High Court Judge William Ramlall who, while he was a sitting Judge, took the State to court over the amendments made to the Act. He said that in 2003 the Judges of the Supreme Court (Court of Appeal and High Court) engaged the President regarding the provision of better terms and conditions of service for all Judges.

A case was made out for the grant of an exemption from income tax on the earnings of all Judges. In 2004, the relevant portion of the Act was passed in the National Assembly which made all annuities received by the Chancellor and Chief Justice exempted from tax.

These include all annuities (excluding those paid out of a superannuation fund) salaries, leave pay, sick bonus, stipend, or other payment of any kind for services, director’s fees, retiring allowances, and compensation for the termination of any contract of employment or service.

Prior to the enactment of the Income Tax Amendment Act, Act No. 7 of 2004 the income of all Judges of the Supreme Court, including the Chancellor and Chief Justice was subject to the same tax treatment; they all had to pay tax. Justice Ramlall deposed that since the passage of the Act, he was subjected to taxes on his emoluments from 2004 to 2014 amounting to more than $34,000,000. This, he said, violated Article 149D  of the Constitution.

Under Article 126 of the Constitution, Justice Corbin Lincoln said that a “Judge” includes the Chancellor, the Chief Justice, a Justice of Appeal, a Puisne Judge, and a part-time Judge. In light of this, she held that like other Judges of the Supreme Court,  the Chancellor and Chief Justice belong to the class of Judges of the Supreme Court as defined by the Constitution.

According to her, while the remuneration of the Chancellor and Chief Justice is higher than the other Judges because they have to perform additional administrative responsibilities, and are at the apex of the hierarchy of the judiciary, the differential tax treatment has no legitimate aim.

Among other things, she said that the Chancellor and Chief Justice must meet the same pre-qualification requirement and have the same retirement age as other Judges of the Court of Appeal, must subscribe to the same oath, have the same judicial responsibilities, and are bound by the same judicial code of conduct as the other Judges of the Supreme Court.

“A ruling or decision of the Chancellor carries no more judicial weight than those of other Judges of the Court of Appeal and, equally, a ruling or decision of the Chief Justice carries no more judicial weight than that of other Judges of the High Court. While the roles of Chancellor and Chief Justice are not identical to other  Judges of the Supreme Court I find that they are analogous and broadly similar,” Justice Corbin-Lincoln held.

She, therefore, underscored that section 13 (a) of the Act has a “discriminatory effect” and declared it unconstitutional insofar as amended by Act No. 7.  In giving Justice Ramlall redress, she ordered the State to pay him $2,500,000 as compensation.

“It is apposite to note that in other (CARICOM) countries all Judges are treated equally in relation to taxes. In Trinidad and Tobago and the Eastern Caribbean, all Judges are exempted from taxes. There is no subset of Judges that enjoys the exemption and others excluded.  In Jamaica, all Judges are subject to taxes,” Justice Corbin-Lincoln pointed out.

Moreover, Justice Ramlall had submitted that based on the laws, he would receive a pension of two-thirds of his salary upon retirement which is the same level of pension received by other public servants and which is insufficient to maintain the standard of living enjoyed as a Judge and keep him from practicing at the Bar on retirement.

Given that Regulation 7(2) of the Pension Act Cap 27.02 dictates that pension for Judges is calculated on the same basis used to calculate pension for the Director Public Prosecutions, Solicitor General, and Chief Parliamentary Counsel, the Judge held that Justice Ramlall failed to establish a right to a declaration that he is entitled upon retirement to a monthly pension and retirement benefits of not less than seven-eights of his salary at the time of his retirement.

The High Court Judge disclosed that there has been no comprehensive review of the terms of conditions of Judges for decades taking into consideration changing social, technological, and economic circumstances. And this, according to her, is not in keeping with the “spirit and intent” of Article 197 (10) of the Constitution.

She said that while Article 197 (10) states that it would be in the interest of the State to provide adequate terms and conditions to Judges, she is of the view  that it would also be in the public interest for steps to be taken to give full effect to the spirit and intent of this constitutional provision.”