It was good to hear Governor Duncan
Taylor say last week that he didn’t think direct taxation was absolutely
necessary in the Cayman Islands.
But Mr. Taylor also said Cayman
needed to make a choice. That choice basically comes down to either imposing
direct taxation or making deep public sector expenditure cuts.
The governor isn’t the first person
to say this; Premier McKeeva Bush has said the same thing and so have those
responsible for the Miller Commission Report.
Every time it has been said in the
past, the Civil Service Association has strongly resisted any reductions of
jobs and salaries or contributions to pensions and health insurance.
Because of the civil services’
opposition every time measures are announced that would affect their take-home
pay, the proposals have been quickly taken off the table.
Round and round we’ve gone like
this since last September, with no cuts at all having been made to civil
service salaries or benefits. If this
dance has taught us anything, it’s that if the Civil Service Association
complains loud enough, the government will back away from their announced
But the dance is just about
over. The government has submitted a
three-year plan to balance the budget to the UK Foreign and Commonwealth Office. If that plan doesn’t include significant cuts
to the public sector that include civil service pay and benefits, it is
doubtful the UK is going to agree to let Cayman borrow the money it needs to
get through the next financial year – at least not without imposing direct
The most significant action that
has been implemented so far to deal with the current budget crisis was to
increase fees, a large portion of which fell on businesses. Should there be any
kind of additional direct taxation that impacts Cayman’s financial services
industry in particular, there will likely be an exodus of businesses from the
Cayman Islands. This will prolong – or
possibly even prevent – the much anticipated economic recovery
Cayman does indeed face a choice
and the decision is rather obvious. It’s time to stop dancing and to start
doing what needs to be done.