Opposition slams budget opacity
Cayman Islands Premier McKeeva Bush said Wednesday that his administration was essentially forced to propose a slew of new revenue measures in the government’s current spending plan.
Mr. Bush told the Legislative Assembly that proposing an unbalanced budget this year was simply not an option.
‘It would have meant the [UK] Foreign Office would have had control,’ Mr. Bush said. ‘When we realised they were going that route, we could not have stretched…the budget deficit out over two or three years.’
‘We did what we had to do.’
Under Cayman Islands law, the British Overseas Territory must remain compliant in six areas of financial management including maintaining certain debt levels, an operating surplus and a cash balance in the government’s budget. If it does not, the UK can assume some operational control – including determining whether the Cayman Islands can borrow money.
‘The foreign office wasn’t even going to let us borrow the full amount (required in the current budget, approximately $260 million),’ Mr. Bush said. ‘And that was to pay off the bill left by the two members (referring to Opposition Leader Kurt Tibbetts and George Town MLA Alden McLaughlin.)’
Premier Bush’s government has introduced dozens of new and increased fees to support government operations; five of those new measures were approved on Wednesday. They included an increase in customs tariffs, Companies Law fees, a brand new fee on money transfers, and new administrative fees for the Cayman Islands Monetary Authority and public document recorders.
Opposition party members demanded that the ruling United Democratic Party government reveal how government’s revenues have performed over the first five months of the fiscal year, from July through November.
‘We still believe that efforts of government to balance the budget in the course of one year…are overly ambitious,’ Mr. McLaughlin said, adding that the opposition’s asking for revenue figures ‘is a perfectly reasonable position for the opposition to take’.
‘Pardon us if we have some unease about what is being proposed,’ Mr. McLaughlin said. ‘As debate progresses on this raft of revenue bills…I become more and more concerned.’
Mr. McLaughlin, a member of the previous People’s Progressive Movement government, admitted that his government’s efforts to reduce spending had failed, leaving the country with an $81 million operating deficit by 30 June – the end of Cayman’s budget year.
Because Cayman’s general elections were held on 20 May, the newly elected government was required to pass a four-month continuing appropriation – which means a similar spending plan as the previous year’s budget was put into place for the first four months of the new fiscal year. The budget drawn up by the newly elected government wasn’t passed until October.
Education Minister Rolston Anglin said government’s ‘major revenue earners,’ proposals to increase work permit fees for foreign workers and increases in customs duties, hadn’t taken effect yet. So, Mr. Anglin said that economic indicators on the new revenues wouldn’t likely be known until February or March at the earliest.
‘(These revenue measures) have had no opportunity to perform,’ Mr. Anglin said. ‘The argument (the opposition) puts forth…is politicking at best.’
Mr. McLaughlin said there was no reason why government could not tell the country where its finances stand at present, regardless of when the new revenue measures will take effect. Proposals for increased work permit fees, and a new 10 per cent tax on rented business premises have not been dealt with yet by Cayman lawmakers.
‘The Premier has said he did what he had to do,’ he said. ‘If that is the case, I am even more concerned if what the Premier is saying is that he simply did what he had to do whether it is grounded in reality or not.’
The government is undertaking an independent revenue study, which will include consideration of direct taxes in the Cayman Islands. That study – being done at the UK’s request – will be completed by the end of February.