Fees on the rise

A promise made by the ruling People’s Progressive Movement that no new revenue measures would be included in this year’s budget is coming under scrutiny by opposition party members.

Opposition Leader McKeeva Bush said in Legislative Assembly that government had voted to increase Health Services Authority fees by 10 per cent, and that policy makers were considering a hike in airport departure fees which could end up doubling those levies.

‘The Leader of Government Business most recently at a Chamber of Commerce forum announced that there were not going to be any new fees charged in this country,’ Mr. Bush said during a debate on the health services fees. ‘Well, what are these?’

The 10 per cent across the board fee increase was approved in a vote that was split along party lines earlier this month.

The increase in airport departure fees has not been formally proposed by the Cayman Islands Airport Authority, but Tourism Minister Charles Clifford confirmed to the Caymanian Compass last week that a fee hike was being considered.

‘We haven’t made a decision as yet,’ Mr. Clifford said.

Mr. Bush has said that the cost of improvements at Owen Roberts Airport has not been disclosed by government, but he implied that some increase in revenues would be needed to pay for the improvements.

Airport officials have said the project’s cost is being kept under wraps because they don’t want to compromise the tendering process.

Leader of Government Business Kurt Tibbetts characterised Mr. Bush’s comments as misleading, and said the opposition leader was taking his statements out of context.

Mr. Tibbetts told the Legislative Assembly last week that the fee increases being discussed were not a part of the central government revenue, but rather applied to statutory authorities which are managed apart from central government.

Both fees are charged to the users of the systems for specific purposes rather than coming from general government funds, Mr. Tibbetts said. The airport fees are paid as a separate tax by airline customers; the health services fees are paid by hospital patients.

‘(Mr. Bush) has cleverly balled everything into one,’ Mr. Tibbetts said, adding that his statements to the Chamber of Commerce referred to central government revenues.

Mr. Tibbetts also said that local businesses would remember a ‘$54 million revenue package’ brought by Mr. Bush’s government in 2001.

Mr. Bush wasn’t buying the leader’s explanation.

‘He’s now saying that when he said there would be no new revenue measures, he was talking about central government,’ Mr. Bush said. ‘He was not telling the truth, the whole truth and nothing but the truth. He has to know about the increase in health costs for that to come to this House when it did.’

Health Minister Anthony Eden did announce his intention to institute at fee increase for the HSA in June 2007 in front of the Legislative Assembly. However, various technical issues delayed the implementation of that fee hike for several months.

No one in government had publicly spoken about the airport departure fees until Mr. Bush raised the issue on Wednesday.

Customs tariffs

Another proposal, which could cause some government duties to rise, albeit indirectly, is the proposed Customs Tariff Bill (2007). A vote on that bill has now been delayed in the past two meetings of the House.

Although there is no general duty increase for imports under the plan, there are specific items on which duty has been added or increased.

For example, in the current tariff law the importation of live turtles to Cayman is duty free. Under the new bill, importers would have to pay a duty of 50 per cent.

The existing list of tariffs on imported goods is broken into 22 sections and itemises duty to be paid on everything from live animals, to vegetables, to cars that are brought to Cayman.

The list proposed in the new bill has the same 22 categories but is much more specific, containing 200 pages of items that could potentially be imported.

The proliferation of categories in the tariff bill could end up adding new fees for items that didn’t previously exist.

Butter and margarine, under the new tariff bill would remain duty free, for instance. However, the proposal creates a new category of dairy spreads, which would have a 20 per cent import duty attached. Dairy spreads are not defined in the bill.

The government has stated the changes in the tariff law are needed because the classification system is not detailed enough to provide useful information.

‘It is currently not known…what is the volume and value of specific items that are imported and exported to and from the islands,’ reads the Customs Tariff Bill (2007) Memorandum of Objects and Reasons. ‘No policy decision can therefore be taken by the government on the quantity of a specific item to be imported.’

The existing law makes it difficult for government to calculate how much revenue will be gained or lost if customs duties are increased or lowered, according to the memorandum.

Compass reporter Alan Markoff contributed to this story.