It’s a story that is not going away.
Cayman’s high cost of living is affecting many lives, and the big question remains, what will the Government do about it.
Less than three months ago, a caycompass.com online poll showed that the cost of living was the issue that concerned more than half of the respondents most. Not crime, not education, and not even the ever-talked about rollover policy. It was the high cost of living that was affecting people’s lives the most.
The government said it would look into ways of lowering the cost of living, and even said it was conducting research through a consultancy company.
In the end however, what can the government really do to ease the cost of living?
It has already stated it doesn’t really want to go the way of price controls. In a free market society, price controls are problematic and they could ultimately close businesses and limit choice.
The only other real way to reduce the cost of living is to reduce taxes that affect the vast majority of the population. The best way to do that is to reduce duty on some product that nearly everybody uses.
That product could be food, but Government’s concern is that reducing duty on food does not necessarily mean food prices will see a corresponding drop because there is no legal framework to guarantee it.
There is a similar problem with gasoline bought at the pumps, which has the added disadvantage in that the poorest of Cayman’s residents – the ones needing relief of the high cost of living the most – often do not have cars to put gasoline in.
Electricity, on the other hand, is used and paid for by just about everyone in this country. West Bay MLA Rolston Anglin is calling for government to give CUC a complete waiver on the duty it pays for fuel, so everyone’s electricity bill will reduce.
For the average household using 1,000 KWH per month, the cost savings would be about $30. For businesses – and government buildings – it would be even more.
Start giving businesses a significant reduction of expenses on a monthly basis and we’re sure a lot of them will reduce their prices as well.
What’s more, there’s a mechanism in place to ensure that any duty waiver given to CUC will be passed on to its consumer. CUC’s fuel cost, including import duty, is part of the equation used in calculating its fuel factor and it has to be reported to government.
In addition, the fuel factor is simply a flow-through expense for CUC, meaning the company just passes on the cost of fuel over its base rate to customers. Plain and simple, if you lower CUC’s fuel costs, you lower electricity bills all over the island.