Thursday, December 17, 2015

Police (Amendment) Bill, 2015

[1]     The Hon Attorney-General of Anguilla has in recent months moved the passage of the Anguilla Police (Amendment) Bill in the House of Assembly of Anguilla, and proposes that it be passed into law without amendment.  He urges that this Bill is intended to give the police the power to, on arrest, take measurements, photographs, fingerprint impressions and non-intimate samples.  The second and third readings of the Bill are slated to occur in the near future.
[2]     The principal concern of the Anguilla Bar Association, which I share, is with section 2 of the Bill which proposes to amend section 26A of the Police Act by deleting subsection (1) and substituting the following:
(1)     It shall be lawful for a Gazetted Police Officer or for any police officer of or below the rank of Inspector who is authorized by the Commissioner of Police to take and record for the purposes of evidence, such non-intimate sample from any person where he suspects that that person, from the nature or character of the offence with which he has been arrested, has been previously convicted or has been engaged in crime and such non-intimate sample is required in the interest of justice or for the purpose of investigating or prosecuting the offence for which he has been arrested.
[3]     Section 26A(4) of the Police Act provides:
(4)     For the purposes of this section “non-intimate sample” means –
(a)          a sample of hair other than a pubic hair;
(b)          a sample taken from a nail or from under a nail;
(c)          a swab taken from the mouth;
(d)          a swab taken from any part of a person’s body other than a body orifice;
(e)          saliva;
(f)            a footprint or a similar impression of any part of a person’s body other than a part of his hand.
[4]     All laws passed by the House of Assembly are subject to the Constitution of Anguilla, 1982.  If a proposed law contravenes any provision of the Constitution, except in a very few cases to do with the subordinate position of Anguilla as a British Overseas Territory and in relation to the UK Parliament, such a law will be liable to be declared unconstitutional if challenged in a court of law.
[5]     In addition to the obligations and standards imposed by the Constitution, there are certain fundamental rights enjoyed by all persons in Anguilla.  The first relevant section of the Constitution is section 1.  This provides:
Fundamental rights and freedoms of the individual
1. Whereas every person in Anguilla is entitled to the fundamental rights and freedoms of the individual, that is to say, the right, whatever his race, place of origin, political opinions, colour, creed or sex, but subject to respect for the rights and freedoms of others and for the public interest, to each and all of the following, namely—
(a) life, liberty, security of the person, the enjoyment of property and the protection of the law; . . .

[6]     In the view of the Bar Association, and in my view, any police action taken without consent which intrudes upon an individual’s body in more than a minimal fashion violates the accused’s right to security of the person.  The Bill infringes this constitutional right to security of the person, and it does so in a manner that is not consistent with the Constitution or the principles of fundamental justice.  By requiring the giving of these samples (some of which are intimate, notwithstanding the characterisation given in the Bill) in the circumstances outlined, amounts to the ultimate invasion of the accused’s privacy, and breaches the sanctity of the body which is essential to the maintenance of human dignity.  This cannot be acceptable in a democratic society.  Accordingly, the Bill infringes section 1 of the Constitution.
[7]     Section 3 of the Constitution provides
Protection of right to personal liberty
3. (1) No person shall be deprived of his personal liberty save as may be authorised by law in any of the following cases, that is to say—
(a) in consequence of his unfitness to plead to a criminal charge;
(b) in execution of the sentence or order of a court, whether established for Anguilla or some other country, in respect of a criminal offence of which he has been convicted; . . .
(f) upon reasonable suspicion of his having committed or of being about to commit a criminal offence under the law of Anguilla; . . .
[8]     Section 3 provides that no person shall be deprived of his personal liberty save as may be authorised by law in nine circumstances, including, where he is reasonably suspected of having committed or being about to commit an offence.  Every person has a right not to be confined or taken anywhere by any government official, including a police officer, against his or her wishes unless in one of the nine circumstances outlined in the Constitution.  Yet, the proposed Bill would permit a police officer to detain an individual and force him or her to give up saliva and fingerprints on mere suspicion.  Mere suspicion is not one of the nine circumstances outlined in the section.  Thus, the requirement of mere suspicion falls below the higher threshold of “reasonable suspicion” set out in the Constitution.  The proposed Bill therefore infringes section 3 of the Constitution.
[9]     Section 8 of the Constitution provides a fundamental right to protection from arbitrary search or entry:
Protection from arbitrary search or entry
8. (1) Except with his own consent, no person shall be subjected to the search of his person or his property or the entry by others on his premises.
(2) Nothing contained in or done under the authority of any law shall be held to be inconsistent with or in contravention of this section to the extent that the law in question makes provision— . . .
(c) that is reasonably required for the purpose of preventing or detecting crime; . . .
and except so far as that provision or, as the case may be, anything done under the authority thereof is shown not to be reasonably justifiable in a democratic society.
[10]   The proposed Bill would permit a police officer to search the person and remove evidence from him.  However, section 8 provides that, except with his own consent, no person shall be subjected to the search of his person or property or the entry of others on his premises.  The only permissible exceptions are where there is a law that is reasonably required in the interests of defence, public safety, public order, public morality, public health, public revenue, town and country planning, or the development of property to promote the public good; or a law permitting search or entry that is reasonably required for the purpose of preventing or detecting crime, or protecting the rights and freedoms of other persons.  Additionally, any law authorising the search of the person without a warrant must be shown to be reasonably justifiable in a democratic society.  In the view of the Bar Association, which view I share, the Bill would fail when considered against the “legitimate aim” and “proportionality” tests, and as such would be struck down by a court as unconstitutional.
[11]   Section 9 of the Constitution contains the familiar provisions to secure the protection of law to all persons in Anguilla:
Provisions to secure protection of law
9. (1) Whenever any person is charged with a criminal offence he shall, unless the charge is withdrawn, be afforded a fair hearing within a reasonable time by an independent and impartial court established by law. . . .
(5) Every person who is charged with a criminal offence shall be presumed to be innocent until he is proved or has pleaded guilty: . . .
(10) No person who is tried for a criminal offence shall be compelled to give evidence at the trial. . . .
[12]   Section 9(5) guarantees that every person charged with an offence is presumed to be innocent until the contrary is proven.  This is the “presumption of innocence” right.  Additionally, section 9(10) confers on all persons the right not to be forced to give evidence against himself or herself.  This is the “right against self-incrimination”.  The proposed Bill undermines both the presumption of innocence and the right against self-incrimination.  By taking samples from the individual even before he or she is charged with any offence that person now has the task of proving his innocence, especially in circumstances where his samples will be forced to speak against him or her.  The burden of proof will have been shifted to the accused contrary to the guarantee under the Constitution.  In the view of the Bar Association, which view I share, the Bill infringes sub-sections 9(5) and 9(10) of the Constitution.
[13]   Research in the various other Overseas Territories reveals that only the Cayman Islands have passed legislation which deals with the taking of non-intimate samples without consent.  But, there is a marked difference between their position and what is being proposed for Anguilla.  In the Cayman Islands law, the police officer who authorises the taking of the sample without consent must have:
(i)      reasonable grounds for suspecting the involvement of the person from whom the sample is to be taken; and
(ii)      reasonable grounds for believing that the sample will tend to confirm or disprove his or her involvement.
It is therefore clear that the Cayman Islands legislation does not authorise taking of samples on mere suspicion.
[14]   In conclusion, I make the following three observations, which are personal to myself and do not reflect the position of the Bar Association.
[15]   First, the rules for the taking, holding, preserving, and presenting items of physical evidence in court are quite strict and stringent.  The police must be able to prove that the physical evidence has been preserved and protected by a rigorous “chain of custody” that makes it highly improbable that the evidence has been interfered with, contaminated, or planted.  Over the past decades, countless serious criminal prosecutions to my knowledge have been lost or compromised because of the failure of the police to follow the basic rules for the uncontaminated preservation of items of physical evidence.  The Royal Anguilla Police Force has a dismal record of failure to produce in court physical evidence, in relation to a criminal case that is being prosecuted, in a manner that is admissible in law.  If the police cannot succeed in producing in court easily preserved physical items such as samples of drugs and firearms due to their failure to follow the rules relating to the chain of custody, how likely is it that they will succeed in being able to produce in court the more sensitive evidence of DNA samples?
[16]   Second, due to institutional weaknesses in the investigation techniques of the police, most convictions are obtained by the use of admissions or confessions made by legally unrepresented defendants.  This Bill will extend the dubious process of obtaining incriminating evidence against an accused person from the accused person himself, instead of through the proper and professional investigation of an offence, and the collecting of evidence sufficient to prove the guilt of the defendant beyond reasonable doubt.  This proposed Act will do nothing to reverse the decline in police investigation and prosecution techniques, but will rather encourage and re-inforce the perception that the best source of evidence is the defendant himself.  In that direction lie too many opportunities for abuse and misuse of power.
[17]   Third, in my opinion, the most likely outcome of the new and draconian powers proposed by this Bill will not be to secure evidence that will lead to convictions in deserving cases, but the powers will instead be used to stop and detain young persons on the side of the street and to humiliate and degrade them as a substitute to properly charging and prosecuting them.  It is this social concern, more than any constitutional or technical legal point, that drives my opposition to this Bill.
Edited 18 December to remove long portions of statutes that are not strictly relevant

Saturday, November 28, 2015

Rescuing the Bank Depositors

How Will Taxpaying Anguillians Rescue the Bank Depositors?
In resolving the present banking crisis, the Government of Anguilla is stepping in to save the depositors at the local banks from suffering a ‘haircut’, or loss of their deposits.  The exact method that Government will go about doing this is not clear to us yet, but the one thing we can be sure of is that it will cost us money.  So, we might as well start thinking about some of the least painful ways we can meet the cost.
In recent months, Government has introduced an innovative (for Anguilla) way to put pressure on taxpayers who have defaulted in paying their taxes.  Government has introduced an administrative gimmick, namely, a tax compliance certificate called a Certificate of Good Standing.  [Never mind that the Certificate is ultra vires and would be struck down by a court if challenged.  It is still a good idea, and only needs to be made legal by passing the required Regulation.] 
The result is that if you want to either sell or purchase a plot of land, you must first pay Inland Revenue EC$50.00 and obtain a Certificate before your land forms will be accepted for registration.  If you are an Executor of a Will and you are distributing the land to the beneficiaries, then both you and each of the beneficiaries must pay for and obtain a Certificate before you will be permitted to give them their devise or gift of land.
The Certificate certifies that you do not owe any Property Tax; Business Licence Fee; Water Rates; Lease tax; Accommodation Tax; Company Filing Fees; Tourism Marketing Levy; Interim Stabilisation Levy; or passed any dishonoured cheque payable to Government.  Since (according to the Chief Auditor) Inland Revenue has no way of tracking most of the above taxes and levies, it is not certain how they arrive at a correct answer when they issue the Certificate.  Maybe they just ask the taxpayer, and take his answer as the truth.  Don’t laugh, most of government’s revenue collection proceeds on this system.  But, I like the idea of a Certificate of Good Standing.  It not only obliges you to go and pay your overdue taxes, it raises its own revenue.
I have some other suggestions for improving revenue collection and boosting the take-off of the economy.  They are tentatively offered for your consideration.  They are just my private, uninformed views.  They may not all find favour with you.  Indeed, you may have better ones.
1.   Make the System Efficient
Begin keeping proper records.  Government must insist that the Administration maintains proper records of receipts and expenditure in every Department.  This has been a complaint of the Chief Auditor every year since 1976 when the Chief Auditor was first appointed.  In the most recently published Chief Auditor’s Report, for 2011, the Chief Auditor explains at paragraph 4 why he cannot give Government’s accounts a clean auditor’s certificate.  [If you have difficulty believing what follows, send me an emailed request at, and I’ll email you a copy of his extraordinary and damning report.]
The Chief Auditor writes that the Government of Anguilla does not maintain adequate records to ensure the completeness and accuracy of the figures reported for advances and deposits; loans made from the consolidated fund; arrears of revenue; and remissions, write-offs and settlements.  What he probably means is that, in the past, a Minister, working through his Permanent Secretary, could make payments that are unauthorised, to friends and associates.  He could illegally forgive and write off taxes for important people who have influence with him.
The Chief Auditor complains at paragraph 5 of his 2011 Report that Government does not comply with the requirements of the Finance and Audit Act in relation to approving reallocation warrants.  What this appears to mean is that in the past a Minister, acting through his Permanent Secretary, could, as an imaginary example, take money approved by the House of Assembly for maintenance of schools and apply that money to some unauthorised project such as the opening up of an archaeological site as part of the marketing programme of a nearby privately owned hotel.  Or, they could, as another imaginary example, divert funds from the Hospital to develop an unauthorised but vote-getting ‘food court’.  The existing penalty for such illegal diversions of government funds, if it should occur, is not applied.
Due to our inadequate record keeping, the Chief Auditor complains that he has not been able to check the accuracy of Inland Revenue’s records relating to Property Tax, Interim Stabilisation Levy, Accommodation Tax, Communication Levy, Bank Deposit Levy, Environmental Levy, or Customs Duties.  He could not be sure that any of these taxes and levies had been calculated, far less paid, in accordance with the relevant laws.  If he could not be sure, how is our Inland Revenue Department going to be sure so they can issue a valid Certificate of Good Standing?
Make the system of payments to government more efficient.  At present, it sometimes takes hours to pay customs duty.  You should no longer have to stand in line to hand over cash to pay any tax for any government goods or services.  You should be able to present your debit card or smart phone to a machine and the amount is instantly paid.  This is the way payments are made all over the world today.  If the little old lady wants to pay cash, let her give the cash to her granddaughter, and let the granddaughter do it automatically for her.
2.   Collect Unpaid Taxes
Reactivate the Internal Audit Department.  I am told (I don’t know how to find out if it is true) that most of the present Internal Audit officers spend all day sitting at their desks shuffling paper.  If it is true, that means they no longer go patrolling government departments to check on whether all receipts are being properly receipted, as was done in the past.  They no longer check to ensure that all payments are properly backed by vouchers and necessary authorisations.  It seems from the 2011 Report of the Chief Auditor that there must be a whiff of truth in this.
The solution is clear.  If Internal Audit is under-staffed, transfer in some of the under-utilised public servants from over-staffed Departments.  Give each of them a quota of delinquent taxpayers to visit each day, to warn them of dire consequences that are about to flow.  If the internal auditors are out of condition and not fit enough to travel about on foot to enforce the tax laws, supply them with bicycles.  Send them to the gym.  I don’t care.  Just make them do the work they are employed to do.
Enforce all present and existing taxes.  Before new taxes are imposed, Government must enforce the existing ones.  No one is going to believe Government is serious about new taxes if some of the established hotels are not paying Accommodation Tax and no effort is made to collect.  Prosecute some of the more delinquent taxpayers, as an example to the others.  Ensure several of them pay hefty fines.  Get a few of them, and their directors if they are companies, sentenced to jail time.
3.   Make all presently voluntary taxes obligatory.
Property Tax in Anguilla, for example, is what is called a voluntary tax.  If you don’t pay it, nothing happens.  There is no fine or imprisonment for failing to pay.  Inland Revenue merely adds on 5% interest.  They make no effort to collect it.  If you never go the Land Registry to find out if you owe any property tax, you will never know.  You are free to die of old age never knowing.
Most houses in Anguilla are unvalued anyway, and their owners never receive an invoice for property tax.  In my case, it took me monthly visits for three years before I could get the Valuation Officer to come out to my house and value it for the purpose of calculating and paying the tax.  Few people would be so obsessive about paying tax.
I own an acre of bare, undeveloped land in St Kitts since it was given as a wedding gift.  Each year I get an invoice posted to Anguilla by St Kitts Inland Revenue reminding me to pay my property tax.  In Anguilla, there is no tax on undeveloped land, only on houses.
4.   Increase Existing Taxes
Double the stamp duty on dealings in real property.  Presently, only the purchaser pays.  The purchaser pays the price to the seller, pays the stamp duty of 5% of the purchase price, and pays the lawyer’s bill.  The seller gets his money and walks away scot-free.  Instead, make both the purchaser and seller pay stamp duty.  If we abolish the fee on Aliens Landholding Regulation Licences (ALRL) on the sale of condominiums and other forms of real property to foreigners then we can easily double the stamp duty under the Stamp Act.  The main revenue earner will be the multi-million dollar condominiums for which past governments have given away the ALRL fee that could be collected by future generations.  Individual Anguillian property owners selling undeveloped land will hardly be affected as few of us are in the business of selling our land.  Besides, in St Kitts-Nevis, as an example, the stamp duty on sale of real property is presently 10%, down from a previous 12%.  So, increasing our stamp duty on property sales from the present 5% to 10% will not be arbitrary or unusual.
Past Governments have given away the ALRL fee on most Licences, so that fee presently raises very little revenue.  The advantage of replacing the fee on Licences by doubling the stamp duty on sale of real property is that, while the ALRL fee is permitted by the Act to be waived by Government ministers, the stamp duty cannot be waived.  It would take a law passed in the House of Assembly to waive stamp duty.  Another advantage is that this 10% would flow from every sale of real property, particularly condominiums, whether to a foreigner or to a local.  It would bring in far more revenue than the ALRL fee does.
Increase import duty on all motor cars to 100% of the value.  One hundred percent customs duty is the level in most islands of the West Indies.  It is higher in some.  The present level in Anguilla is probably the lowest in the West Indies.  If you can afford to buy a Hummer or a Rolls Royce car, you can afford to pay the duty.  It should not matter that some people will complain that they cannot afford to purchase their dream car.  We already have as many cars on the road as the system can manage.
5.   Create New Revenue
Tax on restaurant bills.  There is no restaurant tax in Anguilla, only in the USA.  Some Anguillian restaurants presently cheat their customers on a regular basis by using US-printed restaurant bills which come with a line for “Tax”.  The restaurant proprietor adds the 15% service charge on this line without crossing out the word “Tax”, or adding the words “Service charge”.  The tourist then adds the gratuity of 15-20% to the final bill and the proprietor pockets that, sharing only the “tax” with his staff.  Nothing goes to Government.  The introduction of a real tax on restaurant bills will place no additional burden on tourists.  Such a tax will, instead, keep restaurant owners honest.  Food vans and small food vendors can be easily omitted by selecting the right words in the definition of the type of restaurant this tax applies to.
Tax all billboards and hoardings.  The proliferation of roadside signs clutters and disfigures the appearance of Anguilla.  It does not matter whether they are commercial, social, or charitable.  They are all ugly and unnecessary.  They could be banned as in Lanzarote, but there is no need to do so.  Just tax them.  Let the law provide that any advertisement, hoarding, poster, or billboard erected on any public or private property must pay a tax of $500.00 per year if it is below a certain size and $1,000.00 per year if it is above that size.  Eight by four-foot billboards should be $5,000.00 per year.  The numbers of LIME and Digicel hoardings along the roads would soon come down, significantly improving the view on a drive around the island.  An exception could perhaps be made for a sign affixed to the building which houses the activity being advertised.
Introduce VAT at, say, 20% to replace customs duty.  Presently in Anguilla, the only tax on consumables is customs duty charged on goods imported into Anguilla.  Locally-made goods, and all local services, are free of any tax.  Anguilla is one of the few islands left in the West Indies that does not have Value Added Tax (VAT), known in the USA as Sales Tax.  Some countries have both VAT and customs duties, though most persons would agree that is unfair.  VAT should be payable on all goods and services sold on Anguilla.  In addition to goods, every lawyer’s bill, surveyor’s bill, medical bill, electrical bill, water bill, engineer’s bill, and architect’s bill, for a start, should be obliged to include VAT.
Start with the professions that are already computerised.  Then, progress to the big stores and retail outlets that are already computerised.  Gradually extend down to the smaller outlets, as the kinks in the system get ironed out, and all businesses are forced to become computerised.  Place a hefty penalty for business person caught, either not charging and collecting it, or, worse, collecting it and pocketing it.  Several hotels and rental villas do so at present with Accommodation Tax with impunity.  It is no secret who they are.  They should be vigorously prosecuted.
If we use VAT to replace customs duties, customs officers will not be redundant.  They can be put in the Inland Revenue and Internal Audit Departments to work on collecting taxes.
If we keep customs duties in place, then we should increase the level of duty on luxury and unnecessary items.  We could easily double the duty on alcohol and tobacco.  We should double the duty on all luxury items.  If I can afford to purchase a diamond necklace or a case of champagne or a Hummer car, I cannot be heard to complain about the duty.
VAT and customs duty are both optional taxes.  If I don’t want to pay the duty and the VAT, I don’t have to.  I am free to avoid both of them if I wish.  I don’t have to buy the goods or the service.
Sell Permanent Residence.  Only the USA imposes taxes based on citizenship.  Most other countries tax income on the basis of residence.  Anguilla has no tax on income, whether for citizens or residents.  Permanent residence in Anguilla offers the possibility of a tax advantage to persons who are presently resident in high direct tax jurisdictions.
Many countries, including the USA and Britain, sell citizenship to major investors.  Anguilla has no citizenship it can sell.  But, Anguilla does presently offer a permanent residence stamp in the passport of major investors.  Until now, this permanent residence stamp has been limited to persons who build a hotel or an expensive home on the island.  The project could be developed and marketed to include investments in other ways that will more directly contribute to public revenue, such as the outright sale of permanent residence.  Or it could be attached as a benefit to any investment over a certain amount.
It would not require any change of the law to make permanent residence an automatic entitlement of any foreigner purchasing a condominium.  This is a mere policy decision.  This would be an added attraction to purchasing a condominium in Anguilla.  It would contribute directly to revenue and indirectly to employment.
Free-up our labour market:  The Fair Labour Standards Act of Anguilla makes it a criminal offence to dismiss an employee without good cause.  The process of dismissing an incompetent or insolent employee is fraught with danger, despite all the care taken to follow the rules.  The result is that it is dangerous for a foreign investor to employ anyone he may one day want to terminate for incompetence or inability to do the job.
Anguilla’s labour market can be described as one which is closed by law.   As in the failed economies of Greece and Italy, it is dangerous for a potential foreign employer to access labour in Anguilla.  Greece and Italy also have repressive, closed labour laws and policies.  We can see how this has brought their economies to their knees.
At present, no properly advised foreign investor would be so careless as to put his money into a labour-intensive project in Anguilla.  After the collapse of Cinnamon Reef, Flag Luxury Resort, Malliouhana, and Viceroy Hotels, Anguilla is at risk of becoming internationally known as a cemetery for foreign capital.  I had a client some years ago who described Anguilla as the modern equivalent of the wrecking crews of the West Indies of two hundred years ago.  Instead of bringing ships to ruin on the reef by hanging lanterns in the coconut trees to imitate the lights of a town, and then pillaging the wreck and robbing the crew and passengers as it sinks, we draw investors in, encourage them to invest their money.  We then Labour Department them and work permit them into bankruptcy and closure.  If they attempt to fire a kitchen staff caught stealing a ham from the fridge, the Minister will inform them that their manager’s work permit will not be renewed unless they agree to rehire the thief, who just happens to be related to a good political supporter.  It has happened more than once to my knowledge.
One solution to this employment-hazard problem is to make labour in Anguilla free to hire and fire, whether local or foreign.  The result will likely be a boom in investment.  Opportunities for Anguillians will increase, not decrease.
Enforce existing Aliens Landholding Regulation Licences.  It is a term of the Act, and a condition of each Licence agreed to by the holder, that one of the penalties for breach of the Licence is forfeiture of the property to the Crown.  Forfeiture of property as a penalty under a law is an exception to the constitutional protection of property rights.
There are many properties in Anguilla subject to a Licence which have been in breach for many years, and are being held for speculative purposes.  Some of these projects are condominium-type projects which would have offered employment and contributed to revenue by way of the stamp duty on sales after the promised construction.  Instead, the so-called ‘developers’ are left to laugh at Anguilla’s laws and illegally and in breach of their licences they are sitting on the undeveloped land, hoping to sell it for a huge profit.
The Licences should be enforced.  The proprietors should be forced to sell these properties to someone else who can complete an approved development on them within a specified timeframe.  Failure to sell in the specified time should result in forfeiture.  As for the scandal of the Anguillian Belongers who front for aliens in breach of the Immigration Act and the Aliens Landholding Regulation Act, they should all be vigorously prosecuted.  We all know who they are, but we smile knowingly, and turn our faces.
28 November 2015
1 December 2015:  Revised to clarify that the main increase in revenue from sale of land is expected to come from condominium sales to non-Anguillians;  to change “Impose New Taxes” to “Create New Revenue”;  and to add “Sell Permanent Residence”;  “Free our labour market”;  and “Enforce existing Aliens Landholding Regulation Licences.”