The Cayman Islands government has a forecast operating deficit of $29.1 million for the current budget year, according to a supplemental appropriation presented to the Legislative Assembly Friday morning.
Those documents revealed that Cayman is not forecast to meet requirements to maintain an operating surplus, and in fact was showing a deficit of $13.76 million when subtracting core government operating revenues from core government operating expenses.
An additional $15.1 million in “extraordinary” expense items were listed in the supplemental appropriation report.
According to the report, revenue forecasts for the current budget year dropped some $21 million since they were last calculated.
“This reduction is primarily due to material downward revisions in the areas of levies on international trade and transactions…and domestic levies on goods and services,” the report stated.
Expected revenue from investments was also revised downward by almost 50 per cent because of falling interest rates.
Legislative Assembly members were expected to discuss the report and its ramifications late Friday.
Meanwhile, Cayman Islands lawmakers were debating two proposals Friday morning that would provide a short term reduction in certain customs tariffs and stamp duty on property purchases.
Both proposals appeared to be headed toward passage Friday afternoon.
The first would temporarily reduce stamp duties charged on certain properties along Seven Mile Beach and George Town from 7.5 per cent to 5 per cent. That change will apply to Caymanians and non-Caymanians alike.
The government’s proposal would also reduce stamp duty paid on property purchases by non-Caymanians in all other areas of the island from 6 per cent to 5 per cent.
For Caymanians looking to buy property in other parts of the island, the rate will be cut from 4 per cent to 3 per cent.
The temporary stamp duty reduction will kick in between 1 April, 2009 and 1 October, 2009 and will apply to all conveyances or transfers of immovable property, i.e.; houses, businesses or land.
A rate reduction on customs tariffs of five per cent was also proposed for certain imported construction-related materials such as cement, lumber, plywood, iron, steel and other items.
That tariff reduction, if passed, will be in effect from 1 April, 2009 until 1 January, 2010.
“These are temporary measures,” Financial Secretary Kenneth Jefferson said. “The sole purpose is to stimulate the local economy.”
That statement outraged members of the opposition party, who said the ruling government was playing politics rather than implementing rate reductions that would help actual people.
“I can’t take this bill back to West Bay,” said West Bay MLA Rolston Anglin. “I can’t say to people who are desperate, go and eat cement.”
Opposition Leader McKeeva Bush said he had asked the Government in a February 2008 private members motion to look at its spending with a critical eye, particularly at reducing its borrowing for construction projects.
Mr. Bush said the move to cut import taxes now is a result of government’s failure to heed financial warnings a year ago.
“We will support this,” Mr. Bush said. “But…it’s a little too late.”