Leader of the Opposition McKeeva Bush lashed out at the government for rushing through in important amendment to the Tax Information Authority Law (2005) without substantial financial industry consultation beforehand.
‘They sent down the bill [to the Legislative Assembly] on Monday [15 December] and they had the third reading on Thursday,’ said Mr. Bush. In order to rush the legislation through, the Government had to suspend standing orders of the House which require a bill be circulated to members 21 days before its first reading.
The bill’s memorandum of objects and reasons states the amendments ‘enhance the ability of the Cayman Islands to provided information relating to taxation matters to other jurisdictions in accordance with international co-operation protocols in taxation matters’.
In introducing the bill at Legislative Assembly last Wednesday, Financial Secretary Kenneth Jefferson said the amended law would help the Cayman Islands position itself successfully in relation to international developments in the tax cooperation arena.
‘It is part of the overall strategy which the government has developed, based on careful analysis, over the last year,’ he said. ‘We have established that our financial services sector is not built around tax evasion nor does it rely on absence of transparency.’
The amendments put in place a mechanism designed to meet the Organisation for Economic Cooperation and Development’s technical standards of transparency and provision of information.
The OECD is in the process of drawing up a new blacklist of countries and jurisdictions that fail to cooperate on tax evasion and transparency and there are some in the financial industry that worry Cayman could end up on that list.
In 1998, the OECD first created a list of tax havens it deemed to be non-transparent. The Cayman Islands was not included in that list because it made commitments to increase transparency and information exchange.
Under the provisions of the amended bill, as yet unspecified countries can request information pertaining to taxation.
Mr. Bush said his primary concern was with the way the bill was rushed through without engaging in widespread consultation with members of the financial industry, many of whom he said were not even aware of the proposed changes.
‘If the changes are to address the international challenges that we face, then fine,’ he said. ‘But we need a more open Government on this. Whatever the approach and strategy, we certainly should not be hiding the changes from the major stakeholders within the financial services sector and the Opposition.
Besides Mr. Jefferson’s remarks on the bill, no other member of the House offered any debate on it. However, Mr. Bush was off the island for medical reason on the day it could have been debated.
‘They knew I was going away,’ he said. ‘This is typical of the PPM and the way they have run the financial industry. It’s mostly indecision and non-action, but when they do take action, they do not consult with the industry it affects.’
Mr. Bush said he does not know how the financial industry would react to the amendments.
‘The Tax Information Authority Law is one of the most important pieces of legislation in this country in this day and age where international cooperation and tax information exchange are paramount to the way that our financial industry operates,’ Mr. Bush said. ‘Why has this been done in such a secretive manner? I was away for two days for medical reasons and when I returned I found out that the bill went through the house via committee with changes, apparently passing without debate.’
Mr. Bush anticipated the PPM saying it did consult with certain segments of the financial industry.
“Whatever happened to the days when the Government consulted with the wider industry on major issues such as this?’ he asked. ‘Are we to accept that whoever this small clique of special persons are that are involved in these discussions, know all that is best for this country? Why are we keeping the majority of the financial services sector in the dark on such a potentially major issue?’
Mr. Bush said there should have been at least a special briefing with himself as Leader of the Opposition and some form of wider communication to the broader industry that the amendment was being worked on.
‘We are all supposed to be on the same side when it comes to protecting the Cayman Islands economy,’ he said. ‘Why can’t we put political differences aside on a major issue such as this and bring everyone into the picture on what the plans are?’