In August last year, Key Motors boss Desmond Panton was arrested and charged with several counts of evasion of customs duties and taxes, taking steps to defraud the government of duties, and unlawful removal of goods. His car dealership along Hagley Park Road in St Andrew was also shuttered by the Customs Department.

A few days after, Panton made good and Commissioner of Customs Danville Walker confirmed the payments of approximately $43 million but said that “additional payments due are still being worked out”.

Not having heard anything further about the matter which was widely publicised, it was safe to assume that the issue was settled.

In light of lingering economic problems from the global recession and conditionalities resulting from the IMF engagement last year, the Ministry of Finance announced: “The GOJ has approved a freeze of and reduction in all discretionary waivers that may be granted by the minister of finance and the public service (MFPS), effective August 1, 2010. The freeze of all discretionary waivers granted by the MFPS means that no new discretionary waiver categories will be considered or approved between August 1, 2010 and the date of adoption jamaica-gleaner.com/gleaner/20110314/business/business3.html of a new Tax Waiver/Incentive Policy and Strategy. The reduction in all discretionary waivers granted by the MFPS means that the consideration of discretionary waiver applications between August 1, 2010 and the date of adoption of a new Tax Waiver/Incentive Policy and Strategy will be done within the context of achieving a significant reduction in the total value of waivers granted.”

The prime minister himself has made statements on these waivers. How therefore can we explain the $322-million waiver granted to various entities by the government after that announcement? According to the Ministry of Finance and the Public Service’s website, $321.7 million in waivers was issued.

Paul Mathieu, who is on secondment from the European Union to work with the local finance ministry, says the values of waivers have increased by 55 per cent since the freeze was put in place. Mathieu correctly describes the 55 per cent increase as “a rather baffling outcome”.

One company, Executive Motors Limited, was granted a $183.7-million waiver in GCT. According to the website, the reason given was that the company was in “financial constraints in the face of enormous liabilities”. Executive Motors was granted the biggest waiver of all the entities involved.

Executive Motors Limited, which does significant business with the government of Jamaica (company 20, 719; TRN 000-050-644), is majority-owned by Desmond Panton.

According to the Ministry’s website, under the item for Executive Motors “amount before waiver” there is a $204.2-million entry. Under “amount waived” there is a $183.7 million entry. According to the list and the details supplied, between April 2000 and August 2004, Executive Motors collected GCT on behalf of the GOJ but when penalty of 90 per cent, interest at 90 per cent and surcharges at 90 per cent were added to the amounts collected, a total of $204.2 million was calculated. Which means that due to “financial constraints in the face of enormous liabilities”, Executive Motors paid only $20.5 million.

There can be no denying the fact that doing business in Jamaica is fraught with problems, not the least of which is high utility rates if one is a manufacturer/exporter, plus just existing in an environment which is not business-friendly, especially for new start-ups.

At this time when all key sections of the various ministries are huddled in meetings to fashion a budget in the face of rising oil prices and steep increases in grain, Finance Minister Audley Shaw must be wringing his hands in an effort to present a list of allocations that will even have one-tenth of one per cent of the success that he bravely had with the JDX.

Large manufacturers and distributors, especially those involved in the “sin” sector of hard liquor, beer and cigarettes, will be targeted as crunch time comes round again for a country that has never fully recovered from the effects of the global recession.

Executive Motors is in the business of making money, based on the mark-up on its vehicle imports. As far as I know, it is not in the difficult business of manufacturing but that is its business.

In September 2009, Executive Motors won a tender to supply NWC with 153 Mazda double-cab pickups and 20 single-cab pickups. A total of three companies were involved in the bidding. The other two companies were awarded contracts to supply 22 Suzuki panel vans, two 2-litre Suzuki SUVs and three Toyota minibuses.

In December 2009, Key Motors won a contract to supply NWC with twenty 4000-gallon water trucks. The tender was won on the second bid which involved four companies. Ten of the trucks were supplied to the NWC and 10 were diverted to Haiti to assist with relief operations. Much publicity was given to this with none other than the prime minister showing up for the presentation.

The question is, can the country afford these waivers given to companies that are not necessarily out there struggling in an unkind manufacturing environment? In addition, notwithstanding the high penalties involved, GCT is money collected, not profits that did not materialise because of business downturn.

The government must signal that its word is its bond, especially under the rigours of the IMF engagement. How do we explain tax waivers to rural schools and the poor families sending their children there that the subventions were late because of financial constraints or cash-flow problems? How do we explain the waivers to old men and women and the poor needing medication at the DrugServe outlets that the medications are “intransit” and therefore not available at the time?

I do not for one minute envy Finance Minister Audley Shaw. This financial year is set to be another difficult one for the government and the people of this country. Gas prices are going up, the price of the basic food item, flour, is on an upward swing and the people most vulnerable are reeling from the effects.

Our people must begin to protect themselves, especially with the crisis in the Middle East bringing about volatility in the price of oil. The Energy Ministry can do little about this. Those with cars barely limping along with less than a quarter tank of gas must recognise that a significant chunk of a litre of gasoline is tax.

We have to cut down on travel, especially as we prepare to pay more to JPS. We have to open our refrigerators less, and as in done in my household, if white clothes are soaked before washing, less soap and a shorter cycle in the washer can be the result. Most houses do not use photocells to control outside lights. Turn these on at the very latest at night and switch them off at first light in the morning. Tough times are ahead.

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