Former Cayman Islands Monetary Authority Chairman Tim Ridley makes a very interesting point in a letter to the editor in today’s newspaper about last week’s rushed passing in the Legislative Assembly of the Tax Information Authority Law.
Leader of the Opposition McKeeva Bush also complained about the way the government handled the passing of the bill in a story that appeared on the front page of Monday’s Caymanian Compass.
Both gentlemen complained about the lack of broad public consultation with the bill, even though they both recognised the possible need of putting the legislation in place. Indeed, it could well be argued that the legislation was needed and necessary, but that isn’t the point here.
As Mr. Ridley noted, even if government rushed the legislation through with the best of intentions, the ends do not justify the means, which in this case was the bypassing of the normal parliamentary procedures and the consultative process.
The governing style that suggests ‘we know best’ in this case not only the lacks transparency the PPM government says it stands for, but it is also insulting to those in the financial industry. Ultimately, if anyone knows about the potential impacts of new tax information legislation on the financial industry here, it is those who work in the industry itself, not government bureaucrats or elected politicians.
The financial services sector faces many challenges right now, some resulting in the global economic downturn, some resulting from renewed external pressures to crack down on perceived ‘tax havens’, and some resulting from localised pressures coming from the rollover policy and global labour shortage in certain industries.
The way forward for Cayman’s financial services industry is not through government by fiat, but through a partnership approach. Unless the financial services sector feels like it is part of the decision-making process when it comes to things like legislation, it could very well pick up stakes and move to a jurisdiction that makes it feel part of the process.
As one prominent local attorney has said in speaking about the attractiveness of this jurisdiction for the financial services industry here, Cayman is no longer the prettiest girl at the ball.
When beauty starts to fade, it is things like honesty, partnership and mutual respect that will keep a relationship going. Perhaps the government needs a little relationship counselling before it rashly decides to pass any more important legislation without considering its partners first.