Proposed revenue measures affecting stamp duty on real property and work permit fees could negatively affect the Cayman Islands, West Bay MLA Rolston Anglin said during his contribution to the Budget Debate on Wednesday.
Mr. Anglin began his contribution by making an issue with terminology.
‘Revenue measures are just a dressed up term for a new tax package,’ he said. ‘Apparently it is more palatable for the people who have to pay.’
Speaking of the proposed rise in the rates of stamp duty, Mr. Anglin questioned the decision-making process.
‘We all have to agree that [real property sales] was one of the key causes for this country’s economic success,’ he said. ‘We have to be very careful to understand cause and effect of raising the stamp duty.’
Mr. Anglin asked about the analysis that went into the decision of raising the stamp duty.
‘We need to clearly understand that government came to a decision that raising stamp duty wouldn’t affect [property] demand,’ he said.
Mr. Anglin pointed out that the one-per cent increase, or in some cases, two-and-a-half-per cent, might not seem like much, but that it becomes much more of an issue with properties over seven figures, as the majority of beach properties are now.
Giving credit where he said it was due, Mr. Anglin commended the government for its proposed reduction of stamp duty for Caymanians. He called real property ownership for Caymanians a key nation builder.
However, Mr. Anglin questioned how the government was going to define ‘Caymanian’ for the purposes of the concession, and whether it would apply for those who had received grants of Caymanian Status.
Mr. Anglin also inquired as to the way government would administer the reduction.
‘I see a real opportunity for a new black market to operate in Cayman,’ he said.
‘Where there are significant savings to be made, people will try different things to save the money.’
Mr. Anglin said that if there were successful ways – which could be entirely legal – for others who were not intended to receive the benefit to take advantage of the reduction, it could negatively affect the Government’s projected revenue from stamp duty.
Another revenue measure that concerned Mr. Anglin is the proposed increase in work permit fees and other fees that affect businesses.
Mr. Anglin noted that some of the proposed increases targeted managerial staff and skilled workers, categories of workers in which Cayman has a shortage.
‘When you see taxes are targeting key areas of business, we have to be cognizant that business will continue to analyse whether they need to be in the Cayman Islands at all.’
There is already a trend for many of Cayman’s investment funds to be administered elsewhere, Mr. Anglin said.
‘The real benefits [of the investment industry] are not in the licence fees, or in names on a door,’ he said. ‘They’re in having people living here.’
Mr. Anglin said that some Caymanians are strong advocates for pushing the cost of work permits up so that it makes foreign labour less attractive when compared with Caymanian labour.
‘I’m not so sure this has been proven correct historically,’ he said.
Mr. Anglin said Cayman wanted to make sure the companies stayed here so that Caymanians could get jobs there in the first place.
The increase in work permit fees could have an unwanted effect, he said.
‘[The rise in work permit fees] continues the trend of Cayman being an expensive place to do business, so we’ll see a continued trend of businesses determining if Cayman is the place to do business.
‘I do not believe to hit the sitting duck, to hit the easy target, is the answer.’
On another point, Mr. Anglin encouraged the Government to make the Budget information more easily understood by the public.
Calling the Budget documents intimidating, Mr. Anglin said the average person would not even attempt to review it.
‘What would be helpful is to have a very concise document… of four or five pages that had the Budget highlights; a document that shows where we are and where we’re heading in a much more user-friendly fashion.’
Mr. Anglin said that in order to determine some statistical information on this year’s Budget, he had to go to his computer, type in the figures and run a program himself.
‘Transparency is easy to talk about, but there are little ways to increase it,’ he said.
Mr. Anglin also spoke of the Government’s planned capital spending proposal on infrastructure.
While he acknowledged the need for building and upgrading existing infrastructure, Mr. Anglin questioned the Government’s seeking an allocation to borrow up to $94 million.
Mr. Anglin noted that with the current construction boom, there did not appear to be any surplus manpower to take on all of the capital projects planned.
‘How will Government be able to spend that money?’ he asked. ‘Where will the labour come from to do this volume of work in addition to what is happening in the private sector?
On a final topic, Mr. Anglin said that there needed to be greater accountability for government spending.
‘We believe that it is high time for this country to start to mature from a democratic standpoint, and from an accountability standpoint,’ he said.
Mr. Anglin said the Finance Committee process is unproductive and called it farcical.
‘It is an utter and absolute waste of our time and the tax-payers money,’ he said. ‘We have to stop the tail from wagging the dog.’
Government employees know that the budget will get passed and they are then not held accountable for the money they do receive, Mr. Anglin said.
‘All we’re doing is throwing in taxpayers’ money and we’re not going to get the results we want,’ he said. ‘We need to create a system of accountability.’
Mr. Anglin suggested a bipartisan Appropriations Committee similar to what other countries have as a way of holding government agencies and departments accountable for the money they receive from government.