Revenue measures expected to bring in $23.3 million in the Government’s 2006-07 fiscal year were revealed on Friday during the Budget Address presented by Financial Secretary Kenneth Jefferson.
The bulk of the revenue measures – $17.7million – come from the raising of stamp duty on real estate property, the raising of building permit fees and infrastructure fund fees, and increases in work permit fees and fees associated with General Registry.
The increases will take effect on 1 July, 2006, although some of the fees will not become due until 1 January 2007.
‘The sole purpose of the proposed new revenue measures is to assist in the funding of the important and necessary capital expenditure programme required in the islands,’ Mr. Jefferson said.
Leader of Government of Government Business Kurt Tibbetts called the proposed budget ‘courageous, compassionate, prudent and visionary’ during his Policy Statement address.
Mr. Tibbetts called the Budget courageous because it proposes a capital expenditure of $130 million, ‘the largest capital budget of any government in the history of the Cayman Islands.
‘This is ambitious, without a doubt, but absolutely necessary to address the critical infrastructure needs of these Islands…’ he said.
‘Schools, roads, health care, disaster planning, housing, enhancement of the tourism product, and sports facilities are all being addressed because this government realises and understands that without the proper infrastructure, the quality of life in these islands is greatly diminished and we are rendered a less attractive place in which to live, work and do business.’
Mr. Tibbetts said the Government strove to avoid imposing any new revenue measures that would significantly impact the average person and family.
Although some of the revenue measures could affect ordinary residents indirectly, few will have any direct effects.
One revenue measure that will affect ordinary residents is the proposed rise in postal rates.
Local postage rates, which were last raised in 2001, are proposed to increase from 15 cents to 25 cents.
International rates, which were last adjusted in 1991, are proposed to increase from 30 cents to 75 cents for International Group A (which includes the US); from 40 cents to 80 cents in International Group B (which includes the UK); and from 60 cents to $1 in International Group C.
In addition, it is proposed to increase unaddressed mail (flyers) from 7 cents to 15 cents.
The increase in postal rates is expected to produce $900,000 in additional revenue in the next fiscal year.
The increase in stamp duty for real estate property will not raise the rates all the way back to pre-9/11 levels, and Caymanian individuals will actually pay less stamp duty as a result of a policy decision made to help them better afford homes.
For non-Caymanians and companies, stamp duty will be assessed at six per cent of the purchase price on all properties except those located along the West Bay Road corridor and in certain parts of George Town, which will be assessed at a rate of 7.5 per cent.
Caymanians will pay four per cent of the purchase price, except on those properties located along the West Bay Road corridor and in certain parts of George Town, which will be assessed at the same 7.5 per cent as for non-Caymanians and companies.
In addition, Caymanians acquiring property for the first time will not pay any stamp duty on land costing up to $50,000 or on a property with a residence costing up to $200,000.
Caymanians acquiring property for the first time that costs between $50,000 and $75,000 or a property with a residence that costs between $200,000 and $300,000 will pay stamp duty at two per cent.
The raise in stamp duty is expected to bring in an additional $6 million in the next fiscal year.
Work permit fee increases are expected to bring in $5.13 million.
Not all classifications of employees will have work permit fee increases. For example, the fee for domestic, manual and unskilled labourers will remain at $150.
Some classifications of employees that will have work permit fees increases include executive secretaries (from $1,650 to $2,500); professional managers (from $4,950 to $7,500); professional managers in tourism (from $4,070 to $6,000); skilled construction workers (from $1,210 to $1,500); and unskilled construction workers (from $275 to $375).
Increases in General Registry fees are expected to yield an additional $4.2 million in additional revenue. Fees for various certificates provided for under the Companies Law, like Certificates of Good Standing, will double in price from $41 to $82.
Building permit fees and infrastructure fund fees will be raised back to their pre-9/11 levels, and the increase is anticipated to generate an additional $2.2 million in revenue during the next fiscal year.
Tax Undertaking Certificates, which would protect Exempt companies, partnerships and trusts from any taxation in the event of any future taxation being introduced in the Cayman Islands, will be increased from $150 to $500, which is expected to generate approximately $2.1 million in additional revenue.
One new fee being introduced is the application fee for a Trade & Business licence, which will be set at $75 and is expected to bring in $585,000 over the next fiscal year.
The practising licence fee for a lawyer or accountant is proposed to be increased from $1,500 to $2,000, and the operational licence fee for firms with 51 or more lawyers or accountants is proposed to be raised from $300,000 to $400,000. The two measures combined are expected to generate an additional $500,000 of revenue.
There are increases in licence fees for vessels also proposed.
The licence fee for boats over 18 feet and ships between 18 and 30 feet for commercial and private purposes would increase from $150 to $300; for boats and ships between 31 feet and 50 feet from $500 to $670; and for ships over 50 feet from $1,000 to $1,400.
The fee for a jet ski-boat used for private purposes is proposed to increase from $100 to $200, and the fee for one used for commercial purposes increase from $300 to $400.