THE ROLE OF LICENSING IN BUSINESS AND FREEDOM TO TRADE
The Seychelles Chamber of Commerce & Industry (SCCI) is urging the government to abandon the idea of tampering or modifying the existing Licenses Act and proposes that it should instead enact an entirely new legislation designed primarily to protect the right of the citizen to conduct legitimate business activities against arbitrary state interference and restrictions and to protect the interest of the public in general.
The right to trade and to practice a profession freely is a fundamental right under our constitution protected by the Seychellois Charter of Fundamental Rights and Freedoms, and this right can be restricted only when it is in the interest of national defence, protection of the public health and safety and morals.
The current Licenses Act was enacted during the one party state, preceding the 1993 Constitution. Its purpose was to subject all business activities that the government so desired to be licensed by the government through the Licensing Authority as a way to intimidate political opponents and to suppress political dissent.
Under the existing Act the Licensing Authority has the power to arbitrarily withdraw a business license, and it has not hesitated to use this power in the pursuit of the agenda of former President Albert Rene. The Licensing Authority is made up entirely of bureaucrats representing government departments, appointed by the President at his pleasure but its management takes orders from the Ministry of Finance or State House as to who may not be issued with a license . It was used most effectively in the 1998 election by Mr Rene when a number of prominent businessmen and women were coerced to appear on Mr Rene’s party political broadcast. The renewal of their business licence was coming up.
The current Licensing Act is an enabling legislation. At any time the government can simply Gazette any activity to be subject to a license just because the party in power wishes to create a protection or a monopoly for certain connected business interests. This happened with bottled water. This activity was not subject to a license when a number of private sector enterprises started exploiting it. But as soon as state trading company SMB went into the venture, it became a licensable activity.
Since its inception in 1987, the Licensing Authority would issue a license to an individual rather than an enterprise. This made it easier for the ruling party, SPPF, to penalise its political opponents. At the same time, however, this basis of issuing licenses created the anomaly when a business is sold. The new owner found that he or she had to apply for a new license and go through the whole procedure the previous owner may have just done a few months before and spending the same amount of money in the process. According to the Chamber of Commerce, a new act should license business activities not individuals.
The existing Act also gives the Authority the power to withdraw a license at any time or refuse one arbitrarily, leaving the onus on the licensee to bring the authority to court. In the case of a refusal, the Authority would write a letter to the applicant inviting him or her to come in front of the board to argue as to why he or she should be granted the license, without giving any reason as to why the license was refused in the first place. The Chamber argues that this denies the citizen the right of presumption of innocence, a right enshrined in the Constitution.
The number of licenses issued has now reached a record 20,000 according to information obtained by this newspaper. Many are for people who want to offer their services as masons, carpenters or seamstresses.
But the most controversial aspect of the Licensing Act is the use to which the SPPF government makes of it as a tax collection agency. For instance, when the government wanted to raise more revenue from the tourism industry, it introduced a bed tax on hotels and a car tax on car rental businesses. Hotels and guest houses were required to pay a license fee based on each bed they had, regardless whether the bed was occupied or not, while car rental businesses were made to pay a license fee based on each car in the fleet, regardless whether it had been rented out or not. To impose the new license fee the government simply issued a regulation – which is never debated by the National Assembly.
Most controversially, the Licensing Act gives itself the Minister of Finance the discretionary power to exempt a particular business from some or all the provisions of the Licensing Act, especially the fees. This is specially so in the telecom sector. Telecom businesses are required not to pay a fixed license fee or a percentage of their call or service revenue as license fee. That is calculated after the business has paid GST. The use of license, a form of taxation, is strongly criticised by the World Bank’s Foreign Investment Advisory Service (FIAS) as a disincentive to investments.
Cable and Wireless, the long established telecommunications company pays it license on the basis of a percentage of its revenue but Airtel, its competitor which has individuals close to the leadership of the ruling SPPF as shareholders, pays only a fee of SR 1,000,000 a decision made by the Minister of Finance. Airtel is located on State owned land reclaimed at great cost but leased out to Mrs Sarah Rene, the third wife of former President Rene without the benefit of a tender or public auction as required by law.
The Seychelles Chamber of Commerce (SCCI) has submitted a detailed proposal to government for a new Licensing Act, which it says, should primarily conform to the Charter of Fundamental Rights and Freedoms enshrined in the Constitution. The following are some of the major issues that the SCCI has called upon Government to review and has offered to work closely with Government towards this end.
• Limiting the powers of the Licensing Authority - Specifically removing any power granted to the Licensing Authority to deny any person a license and to set any conditions for a licence, except where those conditions or restrictions are necessary for the safeguard of health, national security and morals.
• Establishing clear and unequivocal conditions based on fundamental principles of protection of public health and safety, and morals – The conditions attaching to a licence should be set out clearly in the regulations so as to allow for maximum transparency and clarity. These should not repeat and include specific regulations that are set out in other laws and regulations.
• Shifting the burden of proof where licenses are to be withdrawn or denied – and placing the onus, where there has been a breach of any conditions, on the Licensing Authority to prove in any court of law that a person should be denied a license or should not have an existing license renewed. This will serve to remove bureaucratic impediments to setting up a business or the arbitrary destruction of an existing business.
• Reviewing the principle of licences – which should be issued automatically to business activities that meet the specified criteria. They should not be issued to physical persons.
• Reviewing the approach to Licence fees – which should not be used as a method for Government to raise revenue as this implies a tax on business start-ups.
Until these and other such changes are effected, the Chamber says, the existing Licences Act and all the regulations there under will remain the biggest impediment to free enterprise in