BELIZE CITY, Thurs. June 11, 2015–Last month, we told you of Government’s plan to introduce new legislation in Parliament, to confirm and validate the US$7 cruise tourism head tax retrospectively, amid a challenge to the tax regime lodged in the Supreme Court by Michael Feinstein, whose US$100 million Stake Bank project is stalled due to an impasse with investors in the Fort Street Tourism Village (FSTV.)
The planned port would provide a new offshore port for the cruise tourism sector at Stake Bank Island, a few miles from Belize City; however, the development would rival the existing port at the Fort Street Tourism Village in Belize City, which claims exclusivity under a contract with the Government of Belize, to which Feinstein was a party before he sold his interest in that investment to Royal Caribbean. Under the existing arrangement, Stake Bank would not be guaranteed a portion of the head tax.
Although Feinstein has sued the Government over the allocation of the head tax to FSTV—from which the FSTV would have earned nearly US$4 million last year—FSTV has countersued for damages, because it claims that if the head tax were to be lost, it would mean a substantial loss of revenue, although its exclusive contract with the Government does not expire until 2028.
Supreme Court Justice Courtney Abel was scheduled to hear the FSTV’s case today and tomorrow, but just as Prime Minister Dean Barrow had indicated, counsel for the Government, Nigel Hawke, sought an adjournment pending the passage of the legislation by Parliament. Senior Counsel Rodwell Williams also argued for an adjournment on the basis that he had a clashing appearance this morning in the Court of Appeal in the case of Roberta Richmond versus Belize Aquaculture Limited.
Justice Abel reluctantly granted an adjournment, but only until next Thursday, June 18, since the judge, who is strongly opposed to what he described as “a culture of adjournments in Belize that has to stop,” says that the promise of legislation to be tabled on Friday, June 26, is mere speculation and does not concern him.
After this morning’s court session, Amandala had a chance to speak with Feinstein, who told us that the promise of the legislation gives him “no sense of comfort whatsoever,” because he has not seen it.
While the Prime Minister told us in May that he had already shared a draft of the bill with Royal Caribbean and the FSTV group, Feinstein’s attorney told us today that he had not seen a copy – and neither have they been apprised of the details of the legislation in the letters which the Government has written to them.
Hawke, who declined an interview this morning when we asked him, told us that he also does not have details of the bill, since it was not drafted by the Attorney General’s Ministry.
The Prime Minister had told us that his decision to resort to legislation resulted from the fact that attempts by him to personally broker a settlement between the parties—FSTV and Feinstein—remained at an impasse, as neither party would compromise its position.
Feinstein said that thecourt will, hopefully, decide where they go from here.
Andrew Marshalleck, SC, of Barrow and Co. (the law firm of Denys Barrow, SC), told us that his client, Feinstein, had challenged a number of provisions in the FSTV’s contract with the Government of Belize, particularly questioning the Government’s authority to contract obligations of the nature that it has.
A central issue in their claim is the decision by the Government of Belize to designate the FSTV as the exclusive port for cruise passengers for the Belize District. Marshalleck said that, “Exclusive arrangements have always been of suspect validity,” because Government is essentially deciding the application of all potential future investors negatively, even before they have seen them – which, Marshalleck contends, is outside the powers of the executive.
Another central element of Feinstein’s challenge is the Government’s decision to award the bulk of the head tax (US$4 of the US$7) to the FSTV.
“We are saying that in accordance with the Constitution, only Parliament has authority to impose a tax and determine how it is to be spent, and what we have is the executive usurping legislative function – not unlike the PetroCaribe challenge; we rely pretty much on the identical financial provisions of the Constitution in that the tax must be imposed under authority of an act and can only be spent under authority of an act – neither of which exists in relation to head taxes,” Marshalleck said.
He told us that whereas the Government says it is an entirely administrative arrangement, the Feinstein claim contends that the arrangement is then entirely illegal.
Rodwell Williams, SC, of Barrow and Williams (the Prime Minister’s law firm), told Amandala that they had filed an ancillary claim in response to Feinstein’s claim, arguing that if the head tax were to be lost, it would represent a loss of revenue to his client, whose contract runs up to 2028. We asked him exactly how much his client would be seeking in damages, but he told us that he did not have the exact figure to share with us.
Prime Minister Barrow has told us that he can’t allow for the head tax arrangement to be scuttled, because FSTV will be shut down if there is no head tax—a move which would no doubt be devastating to the cruise sector.
According to Marshalleck, the FSTV’s counter-lawsuit against the Government and Feinstein would fall away if the new legislation which Government proposes to introduce later this month validates the head tax arrangement, since FSTV would not suffer any loss in head taxes. Although that might resolve FSTV’s concern, though, it does nothing for Mr. Feinstein, Marshalleck said.
Marshalleck expects that the Government’s counsel will again try to seek an adjournment from Justice Abel in June 18.
“The object of this exercise is to push things past the date when the act is tabled, so that the act can be brought back to the court in answer to the claim. Again, that sounds familiar?” Marshalleck commented.