THE Government did its second validation act for the year in the House of Representatives on Wednesday, with the passage of a bill confirming ministerial orders which have been improperly used for several years.

In February, Minister of Finance and Planning, Dr Peter Phillips, piloted legislation validating the improper use of Capital Development Fund (CDF) funds, which were used in contravention of the Bauxite Production Levy Act. The legislation also indemnified public servants who collaborated in the breach from legal action by the public.

As Dr Phillips explained then, in 1999 the then Government sold CDF shares in the Caribbean Cement Company for approximately US$30 million, and placed approximately US$16 million of the funds in the National Investment Bank of Jamaica (NIBJ). But, after the NIBJ declared a dividend of close to $400 million, US$24 million was transferred to the Ministry of Finance, while only US$5 million was retained by the NIBJ on behalf of the CDF.

Phillips recalled that the Auditor General, in the report for year ending 2000, indicated that Section 12 of the Bauxite Production Levy Act states that “all sums received as payment of the production levy under this Act and all other income from the asset of the fund shall be paid into the Fund”.

“Based upon that provision, the Auditor General concluded that failure to pay the proceeds from the sale of Caribbean Cement Company, at the time, into the CDF appeared to be in breach of that section of the Act,” he pointed out.

Phillips insisted that while the unauthorised withdrawals represented a breach of the Bauxite Production Levy Act, the action was done in “good faith”, as the funds were used to “satisfy the financial obligations of the Government in financial year ending March 31, 2000”.

The CDF was established under the Bauxite Production and Levy Act. It was promulgated in 1974 at the time when the Bauxite Production Levy was imposed, and the proceeds of the levy directed to the CDF.

This time around, it was the Minister without Portfolio in the Ministry, Horace Dalley, who tried to explain why the Government was back in the House of Representatives doing a second mea culpa now, for failing to observe the rules of engagement in terms of it imposing taxes by ministerial orders.

Dalley explained that between April 1, 2003 and February 2013, successive governments failed to validate ministerial orders which prescribed variations to the General Consumption Tax (GCT) and the Special Consumption Tax (SCT) and, therefore, had to validate and confirm the imposition, variation and renewal of the taxes collected under the GCT Act through provisional orders pursuant to the Provisional Collection of Tax Act.

The variations and renewals affected the introduction of special rates for the tourism sector in 2005; simplification of the SCT for motor vehicles, as well as items of fuel, cigarettes, alcohol and beverages; exemption of items from increases in the GCT rate from 15 per cent to 17 1/2 per cent; and the increase in the GCT threshold from $1 million to $3 million.

“The orders were renewed after six months, as the law allowed, but they were neither confirmed by the House of Representatives nor introduced into the House in the form of permanent legislation. However, during the period, the taxes were collected in good faith,” Dalley insisted.

He also announced that the current practice of gazetting the orders, without bringing the necessary legislation to make them permanent to the House, will be discontinued by the ministry.

Opposition spokesman on finance, Audley Shaw, said that the provisional orders were a necessity for ministers of finance, and it would be impractical to discontinue the practice, as the orders were necessary for urgent, emergency action. But, he said that it was important that in issuing orders, the ministry ensure that the “letter of the law” is followed.

However, he said that employees of the ministry had the responsibility to ensure that the minister, who has the ultimate responsibility, is not compromised.

“I want to use this opportunity to say our public sector workers, don’t cause your ministers to have to come to Parliament to face the brunt of it. It is unacceptable. Let’s not make it happen, again,” the former finance minister said.

Dalley said that he took the point that the staff had to be more vigilant and supportive of the minister. The bill was also passed in the Senate on Friday, piloted by Minister of Justice, Senator Mark Golding.

Chairman of the Public Administration and Appropriations Committee (PAAC) and Opposition spokesman on tourism, Edmund Bartlett, said that he has been looking forward to this weekend’s Planning and Development Retreat of his committee.

The retreat which is being held at the Gran Bahia Principe Hotel, Runaway Bay, started yesterday and ends today. It provides an opportunity for the “institutional strengthening” of the PAAC, he said.

Presentations are expected from public and private sector entities, including the Ministry of Finance and Planning; the Management Institute for National Development (MIND); the Auditor General’s Department; the Planning Institute of Jamaica (PIOJ); the Bank of Jamaica (BOJ); and the Private Sector Organisation of Jamaica (PSOJ).

Following the presentations, the PAAC will plan its work schedule for 2013/14.