Editorial | More, please, TAJ

Tax Administration Jamaica (TAJ) needs to provide deeper justification for its decision to lease a property that it won’t have occupied for five years, and on which it will have spent perhaps J$1.7 billion by the time it moves in. This doesn’t include expected cost overruns that normally accompany government projects.

The TAJ’s claim that it couldn’t find anywhere in the central Jamaican town of Mandeville, Manchester, to construct its own building – which is what its boss, Ainsley Powell, told Parliament’s Public Accounts Committee (PAC) on Wednesday – is, on its face, unconvincing. Perhaps Mr Powell’s scouts weren’t looking hard enough.

Nigel Clarke, the finance minister, to whom TAJ, the government’s tax agency, is accountable, should, in the circumstances, provide a fuller statement on this matter to Parliament.

This issue came to the public’s attention several weeks ago in a report by the Auditor General (AuG), that TAJ had, over three years (up to last August), spent nearly J$372 million leasing two buildings, which it was yet to occupy. Another J$80 million has since been added to that tab, Mr Powell revealed to the PAC.

The smaller, and less costly, of the properties, in Annotto Bay, St Mary, is leased from a company owned by a government parliamentarian, Norman Dunn. The public discovered this in April because Dr Dunn confirmed it to be so, when asked by this newspaper.

The TAJ, in a fashion befitting circus contortionists, had declined to disclose the lessor of either property, claiming, ridiculously, that to do so would infringe on the privacy of the owners, in breach of the recently promulgated Data Protection Act (DPA).

MATTERED NAUGHT

It mattered naught to TAJ, it seemed, that it had entered an agreement on behalf of the taxpayers of Jamaica, to whom it has a fiduciary obligation and ought to be accountable.

The monthly lease of the Annotto Bay property is J$700,000. At the time of the AuG’s report, TAJ had already paid J$15 million in rent.

According to the TAJ’s Mr Powell, the retrofitting of that building is now imminent. It will cost J$30 million and the property should be ready by September.

The name of the lessor of the more than 42,000 square feet Mandeville property has finally been prised from TAJ. On Wednesday, post-Mr Powell’s PAC appearance, the tax administration body announced it was a sublease from a company called Cost Club. The property’s underlying owner is Scojampen Ltd, the pension fund of Bank of Nova Scotia (Jamaica).

As a matter of principle, this information ought to have been available from the start, rather than made the subject of a concocted secrecy, as though its revelation would pose a grave threat to national security.

But beyond providing the name(s) of its business partners, TAJ is now obliged to offer a more robust business case for this arrangement, than was on offer at the PAJ session, lest it be accused of laziness or insufficient care in its expenditure and management of taxpayers money.

First, TAJ reached an agreement with the owners of the Mandeville property in 2019. It began paying on its annual lease of J$85.6 million (minus upkeep and general consumption tax ) in September, 2020.

The TAJ claims that it faced delays in renovating the property because of the government’s procurement rules. So, by the time the TAJ moves into the premises, now planned for September, 2025, it will have been at this process for more than five years. That is if it keeps to its timelines.

AWARE OF PROCUREMENT REGULATIONS

The TAJ ought to have been, and no doubt was, aware of the procurement regulations, prior to embarking on this exercise. It, therefore, should have had a clear grasp of how long it would take to complete a project of the size it contemplated. Indeed, it could have constructed a building to the specifications and size it requires in far less than five years.

Construction from scratch, Mr Powell said, was TAJ’s initial plan in his answer to the slack-jawed astonishment of the PAC’s chairman, Julian Robinson, to Mr Powell’s revelation that it will cost “somewhere close to a billion” to retrofit the leased property to the tax agency’s needs.

He said: “When we started out, we had actually pursued the acquisition of property … We were not able to find suitable property within the confines of Mandeville.”

Supposedly, the TAJ was concerned that moving its operation out of the heart of the town would increase transaction costs to its customers, including in transportation fares.

It is not clear, at least not from Mr Powell’s presentation, or in TAJ’s other statements on the matter, that the agency engaged in the level of cost-benefit analysis that should have preceded a project such as this one. And neither is there any information on how the decision interlocks with the government’s broader development policy, especially spatial planning.

Mandeville is an increasingly congested town, which has been expanding in higgledy-piggledy fashion. A modern, purpose-built revenue centre might have been a focal point around which an orderly development of the town could have been planned. Which might still be possible.

Such a building could no doubt have been constructed for under J$1.7 billion, including the appropriate parking space which Mr Powell said enticed TAJ to the property it leased.

Maybe Dr Clarke should appoint new scouts to search new lands in the Mandeville area for such a development. Fresh eyes and a new mandate might help them see what the TAJ’s team failed to notice.