Lead Stories

Mark Titus, Business Reporter

A rift involving the Customs Department and two local banks over a total $350 million in charges levied on the government agency for use of the financial institutions' electronic payment facilities to collect $13.8 billion in taxes last year threatens to result in the suspension of the e-commerce service as of March 1, Sunday Business has learned.

The banks, sources say, facilitated the collection of roughly 20 per cent of the Government's revenues from Customs duties at the island's air and sea ports between January and December last year. But the department is believed to have baulked at the level of the e-payment charges, citing the mere $20 million it has paid out to collect more than $56 billion using conventional transaction methods.

The standard charge for e-payment transactions on one of the bank's network is set at 1.65 per cent of the total collected, while the other levies a charge of 1.75 per cent plus US25 cents per transaction.

Demanding payment

Customs is said to have paid most of the charge but refuses to hand over about $95 million owed to the two banks, which have since written to Commissioner of Customs Danville Walker demanding payment.

The banks are believed to have indicated that the service could be pulled unless the outstanding amount is settled. Walker, in response, has since written to importers that utilise the service, informing them that the service will be suspended as of March 1.

Sunday Business sources say the government department is seeking a reduction in the rates from the financial institutions and is willing to walk away from the facility if there is no resolution.

It is understood that Customs is seeking a cheaper rate, up to a 50 per cent reduction, for the service fee, saying it does not want to pass on the added cost to importers. But, it is unclear whether the banks, which both recorded net profit of more than $10 billion for 2009, and stand to see interest income challenged by falling interest rates and government-imposed debt exchange, will budge.

A normally outspoken Walker, while admitting that there was "a situation" involving the banks, refused to comment further on the issue.

"This is not a matter that I would want to discuss at this time," he told Sunday Business .

Meanwhile the planned suspension is causing disquiet among importers, and according to Carlton Powell, who uses the time-saving facility to pay his fees, any reduction will benefit importers, Customs and the country.

"It is ridiculous for the Government to give up such a high percentage of its revenues," he said.

"It is a time for us to be cutting back, so it cannot be that while we are tightening our belts, others are making themselves rich."

mark.titus@gleanerjm.com