CIREBA opposed to changes
Arden McLean defended his government’s decision to raise stamp duties in certain West Bay Road and George Town locations to 7.5 per cent, up from 5 per cent – changes not welcomed by the Cayman Islands Real Estate Brokers Association – in the Legislature last week.
CIREBA made its 5 May comments available to the Compass recently, which revealed that the organsiation had expressed its ‘surprise and disappointment’ with the proposed changes, and felt the direction the government has chosen ‘is not in the best long-term interests of Cayman.’
Mr. McLean, Minister of Communications, Works and Infrastructure, said it was surprising, considering that, while the government had lowered its stamp duties in the wake of 9-11 in order to stimulate the economy, he questioned whether members of CIREBA had engaged in similar measures themselves.
CIREBA claimed it also reduced commission rates to achieve a similar end in response to 9-11.
The letter also questioned the wisdom of implementing the entire rate increase at the end of the high selling season rather than waiting, or at least raising it incrementally.
The Minister countered CIREBA’s allegations that lowered stamp duties for Caymanian buyers were discriminatory.
‘We feel that it will have a decidedly negative effect on investor confidence as it is a signal that Government is willing to apply taxes arbitrarily against foreign investors or residents,’ the letter said.
It also said the move will add ‘to the growing divisiveness between locals and expats; Caymanians and foreign visitors,’ and will ‘further emphasize the differences between the two or three groups who make up our society and create a mechanism which will easily allow future Governments to further widen that gap when ‘new sources of revenue’ are required.’
‘Who are we building for?’ asked Minister McLean, arguing that a vast majority of nations use similarly preferential practices favouring their citizens.
As for the 2.5 per cent rise in the one-time duties deterring foreign investors, he challenged CIREBA to come up with the comparable land taxes a foreign buyer would have to pay in their native country.
CIREBA asked why it is wise to reduce duties if Caymanian buyers were currently able to handle a 5 per cent rate, and also inquired why, ‘If you want to help first time Caymanian home buyers, why not just waive the duty for them on whatever they purchase?’
Minister McLean said many more Caymanians would now be able to purchase properties, and duties were not waived as most of the buyers as proud Caymanians will be grateful for this new opportunity to contribute to their county’s reserves through stamp duties.
And responding to whether the higher rates were discriminating against Caymanians who would be deterred from purchasing land on West Bay Road, he expressed his belief that it would not act as a deterrent to those already possessing sufficient means to purchase properties in those areas.