THE REPUBLIC OF UGANDA
IN THE SUPREME COURT OF UGANDA
CONSTITUTIONAL APPEAL NO.07 OF 2005
(CORAM: ODOKI, C.J., TSEKOOKO, MULENGA, KANYEIAMBA,
KATUREEME, OKELLO, JJ.SC, EGONDA NTENDE, AG. JJ.SC).
ATTORNEY GENERAL OF
THE REPUBLIC OF UGANDA :::::::::::::::::::::: APPELLANT
13. MASALU MUSENE WILSON
14. KEITIRIMA JOHN AUDES
15. SEKAGYA RONALD ::::::::::::::: RESPONDENTS
16. MUHIIRWA ALAARI K.
[Appeal from the Judgment of the Constitutional Court (Hon. Lady Justice A.E.N Mpagi-Bahigeine, S.G. Engwau, A. Twinomujuni, J.A) delivered at Kampala on the 23rd day of February, 2004 in Constitutional Petition No. 05 of 2004].
JUDGMENT OF THE COURT
This is an appeal against a decision of the Constitutional Court whereby that court held by a majority of 3 to 2 that the imposition of income tax on the salaries of the Respondents as Judicial officers was inconsistent with and in violation of article 128(7) of the Constitution, and that their salaries, allowances, privileges and retirement benefit and other conditions of service must not be subject to any form of taxation whatsoever. The appellant, the Attorney General of Uganda was dissatisfied with that decision, hence this appeal.
The facts of the case are as follows: The 1st, 2nd, 3rd and 4th Respondents were judicial officers as Registrar, Chief Magistrate, Magistrate Grade 1 and Magistrate Grade 11 respectively. They were aggrieved by the implementation of Section 4(1) of the Income Tax Act whereby their salaries were subjected to income tax deductions. They petitioned the Constitutional Court, alleging that the application of that section of the Income Tax Act to their salaries was inconsistent with Article 128(7) of the Constitution which, according to them protected the salaries of Judicial officers from being varied to their disadvantage .
They sought declarations that:
the application of Section 4(1) of the Income tax Act to judicial officers was inconsistent with Article 128(7) of the Constitution,
2. Judicial Officers’ salaries, allowances and retirement benefits and other emoluments must not be taxed.
They also sought an order of court that judicial officers are entitled to their full pay without variation to their disadvantage with the coming into effect of the 1995 Constitution. They further prayed for costs of the petition. The court granted the first two prayers, and ordered that the judicial officers be paid their full pay without deduction of tax with effect from the date of the judgment. The court made no order as to costs.
The appellant appealed against the above declarations and order. The respondents cross-appealed against the order not to tax their emoluments having effect from the date of the judgment, asserting that it should commence from the coming into effect of the 1995 Constitution. They also cross-appealed against the order not to award them costs.
The appellant filed 3 grounds of appeal as follows:-
“That the learned Justices of Appeal erred in law and in fact when they held that the application of section 4(1) of the Income Tax Act of 1997 to Judicial Officers is inconsistent with and contravenes Article 128(7) of the Constitution.
2. “That the learned Justices of Appeal erred in law and in fact when they declared and ordered that the Judicial officers’ salaries, allowances, privileges and retirement benefits and other conditions of service must not be subjected to any taxation whatsoever.
3. “That the learned Justices of Appeal erred in law and in fact when they ordered that Judicial Officers are entitled to their full pay without variation to their disadvantage as from the date of the judgment.”
The appellant also prayed for costs of the appeal. In their cross-appeal, the respondents filed two grounds as follows:
“The learned Justices of the Constitutional Court erred in law by failing to grant the respondents costs of the petition without assigning any reasons thereof.
2. “The learned Justices of the Constitutional Court erred in law and in fact, by failing to order that the respondents are entitled to their full pay without variation with the coming into effect of the 1995 Constitution, yet having made a finding that their constitutional rights have been infringed since 1995.”
The respondents also prays for costs of the appeal and cross-appeal. Both parties filed written submissions.
The appellant argued grounds one and two together. The appellant submitted that the application of section 4(1) of the Income Tax to the salaries of the respondents was not inconsistent with or in violation of Article 128(7) of the Constitution as held by the majority of the learned Justices of the Constitutional Court. The appellant supported and fully associated himself with the dissenting Judgments and rulings of C.N.B Kitumba and C.K. Byamugisha, JJ.A. In his view, taxation of salaries of Judicial officers was not a variation of their salaries. The respondents had never enjoyed the privilege of tax exemption, as had been enjoyed by Judges prior to the coming into effect of the 1995, Constitution, and their continued taxation was not in conflict with the constitution. He argued that payment of tax is a duty imposed on all citizens by the Constitution unless there was a specific exemption accorded to a person or persons within the Constitution or under the relevant law. The respondents enjoyed no such exemption either within the Constitution or under any other relevant law. The appellant further submitted that the words “vary” and “taxation” are different and
cannot be used interchangeably. One ought to follow the principle of constitutional interpretation that in determining the constitutionality of a statute, the effect and purpose of its provisions should be considered. He invited this court to follow the reasoning of Kitumba, J.A, in this regard.
The appellant further submitted that the constitutional Court had misdirected itself when they relied on the case of EVANS -Vs- GORE, ACTING COLLECTOR OF INTERNAL REVENUE 253. U.S. 245 (1920) to hold that a Judge’s salary could not be taxed because such taxation amounted to diminishing of his salary. He cited the later case of UNITED STATES -Vs- TERRY J. HATTER, JR. JUDGE, UNITED STATES DISTRICT COURT 532 U.S (2001), wherein the Supreme Court of the United States has overruled EVANS and held that imposition of a general tax which was payable by all citizens, was not a diminution of a Judge’s salary and was not unconstitutional. The appellant prayed that this court be persuaded by HATTER since it had expressly overruled EVANS.
For the respondents, their counsel fully supported the decision of the majority of the Justices of the Constitutional Court that the application of Section 4(1) of the Income Tax Act to Judicial Officers salaries was unconstitutional, and that salaries, allowances, privileges and retirement benefits of Judicial Officers must not be subject to any taxation whatsoever. Counsel argued that Article 128(7) of the Constitution entrenched the independence of the Judiciary and covered all Judicial Officers including both members of the higher bench and lower bench. They submitted further that Article 128(7) was not meant to benefit only the Judges who enjoyed the tax exemption benefits before the coming into force of the 1995 Constitution, but that by itself that Article extended a tax exemption to all Judicial Officers. They contended that to argue otherwise would mean that the benefit of tax exemption would apply to only those Judges who were in office at the time of the Constitution. Counsel argued further that the lower judicial officers had a heavy workload as a result of changes in the law which had conferred on them higher jurisdiction and therefore they needed the tax exemption as further remuneration for a heavier work schedule. In the alternative, counsel argued that since the Judicial Officers had already had the benefit of tax exemption from the date of the Judgment, it could not now be taken away from them.
We have carefully considered all the submissions of counsel. We agree that Article 128(7) is meant to be a pillar for the independence of the Judiciary. The need for Judicial Officers to be well compensated so as to uphold their independence cannot be overstated. We agree with Mpagi-Bahigene, J.A, when she states in her lead judgment;
“The underlying principle of the entire Article 128 is the issue of judicial independence and security of tenure, the latter being among the traditional safeguards of the former. This means amongst other things that the term of office, emoluments and other conditions of service of Judicial Officers generally shall not be varied or altered to their detriment or disadvantage. This is an elementary safeguard to be found in most developed legal systems where it took many historic struggles to establish on a firm footing as the most fundamental of all safeguards of Judicial officers’ security of tenure. When this safeguard is destroyed by whittling away the provisions of Article 128(7) and judicial officers are put at the sufferance of the executive or at the whims of the legislature, the independence of the judiciary is the first victim. The rationale under article 128(7) is that there should be adequate salaries and pensions for judicial officers commensurable with their status, dignity and responsibility of their office.”
These sentiments are also very strongly carried in the Judgment of Twinomujuni; JA., who goes to great length to quote from the judgments in EVANS to show that imposition of tax on a Judge’s salary amounts to a variation to the disadvantage of the Judge and therefore renders it unconstitutional.
With great respect, we think that the learned Justices are mixing up two distinct issues. The first one is about the need for adequate remuneration. That cannot be gainsaid. Judicial officers need to be adequately remunerated given the unique nature of their work and status in society, and the need to protect and preserve their independence. The second is whether that remuneration, whether adequate or not, can be varied to the disadvantage of the judicial officer. The crucial word there is “vary” as used in article 128(7) of the Constitution. For purpose of clarity we reproduce Article 128(7) as follows:
128 (7) “The salary, allowances, privileges and retirement benefits and other conditions of service of a Judicial officer or other person exercising judicial power shall not be varied to his or her disadvantage.”
There is no specific exemption from taxation conferred on Judicial officers, as is the case with, for example, the salary of the President under Article 106(4) which states: “The President is exempted from direct personal taxation on allowances and other benefits except on the official salary.” These clear words mean that whereas the allowances and other benefits of the President are exempted from direct personal taxation, his salary is not so exempted. Yet article 106(6) is virtually a replica of Article 128(7). It states:-
106(6)”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.”
These provisions use the word “vary” on the other hand Article 158(1) states:
“Where any salary or allowance of the holder of any office is charged on the Consolidated Fund, it shall not be altered to his or her disadvantage after he or she has been appointed to that office.”
Counsel for the appellant argued that these provisions show that the Constitution makes a distinction between taxation and variation of emoluments. Where it sought to confer a tax exemption it provided so expressly as in the case of the President’s salary.
We agree. In our considered opinion, had the framers of the Constitution wanted to confer a tax exemption on emoluments of Judicial officers, they would have said so expressly. To equate variation with taxation would mean that all those officers covered by article 158(1) would also enjoy a tax exemption. It would also import an unnecessary and uncalled for conflict between article 106(4) and 106(6), as Mpagi-Bahigeine, and Twinomujuni, JJ.A attempt to do. Twinomujuni, JA., goes further to try to show that Article 158(1) is different from 128(7) because it uses the word “alter” which he states to be different from the word “vary”. In our view the words “vary” and “alter” can be used interchangeably as they mean the same thing. BLACK’S LAW DICTIONARY defines “alter” Thus:
“To make change in: to modify: to vary in some degree;” to change some of the elements or ingredients or details without substituting an entirely new thing or destroying the identity of the thing affected. To change partially. To change in one or more respects, but without destruction of existence or identity of the thing changed , to increase or diminish.”
On the other hand, the OXFORD ADVANCED LEARNER’S DICTIONARY defines “vary” thus:
“To make changes to something to make it slightly different.”
Clearly, the drafters of the Constitution used the words “vary” and “alter” interchangeably to mean the same thing, i.e., the emoluments of the persons concerned could not be changed to their disadvantage. For the salary of the President, the Constitution stipulates clearly that it shall not be taxed. The issue therefore is whether requiring Judicial officers to pay tax under section 4(1) of the Income Tax Act amounts to a variation of their salaries to their disadvantage.
The learned Justices of the Constitutional Court relied heavily on the EVANS case (supra). That case was interpreting a clause in the American Constitution which is similar in material respects to Article 128(7) of our Constitution. It provides as follows:-
“The Judges, both of the Supreme and inferior courts, shall hold their offices during good behaviour, and shall at stated times, receive for their services a compensation, which shall not be diminished during their continuance in office”.
The issue was whether taxation of a Judge’s salary was a diminution of his compensation contrary to the above provision. The Supreme Court of the United States held that such taxation was indeed a diminution of a Judge’s compensation and unconstitutional. This decision was followed by the majority of Justices of the Constitutional Court.
However, it apparently was not brought to the attention of the Constitutional Court that there had been considerable changes in the law in the United States since 1920 when EVANS was decided. That decision received much criticism in subsequent cases both in the United States and other Commonwealth countries and was eventually overruled. In O’MALLEY -Vs- WOODROUGH, 307 U.S 277 282 (1939,
the Supreme Court of the United States adopted the reasoning of the dissenting Justices in EVANS that Judges are not immune from sharing with other citizens the material burden of the government, and therefore their payment of a non-discriminatory tax laid generally on all citizens was not a diminution of Judges’ salaries.
The reasoning in