Opposition: Fees don’t cut it

Members of Cayman’s opposition
political party said last week that a bevy of new fees and charges that were
approved as part of the country’s 2009/10 budget didn’t earn anything close to
what the ruling administration once had hoped.

In fact, when comparing government
revenues for the fiscal year that ended on 30 June to the previous year,
opposition members noted that the grand total revenue increase was a little
more than $4 million.

According to unaudited figures, the
Cayman Islands ended the 2008/09 year with $487.4 million in revenues; it ended
2009/10 with a forecast $491.6 million in revenues.

“In the result, the $94 million of
projected revenue didn’t happen,” said George Town MLA Alden McLaughlin.

For an entire year, the government
said its package of new and increased revenue measures during the 2009/10
budget would have earned about $126 million. Because of delays in the budget
process caused by the May 2009 elections, government expected the new fees to
raise somewhere around $94 million for the remainder of the 2009/10 year.

However, since most of those
charges didn’t take effect until January, that amount was not taken in. Also,
there were some fees initially proposed by government – such as the 10 per cent
business premises fee – that were never implemented.

Mr. McLaughlin’s comments came
during a political meeting of the opposition People’s Progressive Movement
party last week in George Town, during which he fully admitted that
government’s major financial problems started on his party’s watch. 

“The first major deficit occurred
in the last year of our administration,” Mr. McLaughlin said.

That spending gap – basically the
difference between what government earned and what it paid for various services
– was at $81 million in June 2009. By last month, the government operating
deficit had been reduced to some $45 million, according to budget documents.

That gap shrank mainly due to a
reduction in government spending.

Considering the relatively small
increase in government revenues, Mr. McLaughlin said he found it surprising the
government would choose to increase more fees in the current budget, including
planning and development charges and fuel import duties.

“Having had the benefit – if you
can call it that – of that particular experience – that increasing fees significantly
in relation to one sector of the economy has had the opposite effect intended –
they’ve gone and done it again,” Mr. McLaughlin said.

“It is absolutely the wrong
approach to increase the cost on those who do business here in the middle of
the worst recession the world has seen since the Great Depression of the ’30s.”

During the Legislative Assembly
debate on the new government budget and on the 25 cent increase on fuel
imports, Premier Bush repeatedly pointed out that opposition members would make
similar statements and not propose alternative revenue generation measures.

Mr. Bush has publicly lambasted
four opposition lawmakers for voting against his government’s budget for the
2010/11 fiscal year.

“Leadership requires prudence,” Mr.
Bush said during his introduction of the amendment to fuel import duties. “We
must be prepared to make the tough decisions that are in the country’s

Mr. Bush said his government had
examined many other options and had determined that the fuel import increase
was the lesser of many evils.

For instance, Mr. Bush said the
projected 5 per cent increase in electricity bills expected to result from the
import duty hike would mean roughly $10 extra a month on a $200 Caribbean
Utilities Company bill.  That would add
up to $120 per year in additional electric fees.

An increase in vehicle registration
charges from $160 to $400 annually – as North Side MLA Ezzard Miller had
proposed – would cost drivers an extra $240 a year, Mr. Bush said. 

Income taxes of 2 per cent on a $30,000 a
year salary would come to $600 a year; while property taxes of 2 per cent on a
$200,000 home would lead to yearly payments of $4,000, Mr.

Support local journalism. Subscribe to the all-access pass for the Cayman Compass.

Subscribe now


  1. If fees dont cut it, then why legislate a sustainable revenue measure like a tax?

    The tax that is most favorable, less controversial, does not hurt the unemployed and low-wager, and is more friendlier to the banking and financial industry, should be the tax implemented. I dont recommend a VAT tax which will hurt the unemployed nor a tax for just one group of people, or that is imposed from the UK. This tax must benefit the people and environment of the Cayman Islands.

    A well regulated income tax would be the best option for Cayman. I am a proponent of collectivized wealth; if you became rich through society then you must be able to give back to society, because you did not made your way up the ladder for nothing. You should give back and pay your tax. The tax from your income and business income would be used to support government programs like social services, protection, traffic, health and housing. Taxes always should go back to the people, and should always be transparent. Public disclosure of personal income tax filings occurs in Finland and Norway.

    So under the right conditions and laws, an Income tax would do us good, I believe. No one likes it, but it is one of the sure ways of getting money to pay off debts.

    See it this way, if everyone continues to just save and hoard the wealth they make, you will see more and more people left-out and walking the streets, iching to commit a crime. You may say that they are lazy and irresponsible, but if government does not collect the revenue necessary to support certain folk, you would call that irresponsibility too on their part. The wealthy. Dart, and well-off Caymanians are the ones running this island. Do we want to continue this trend we are on?

    Of course not!

    Increasing fees won’t do it. Waiting to create more revenue will take a while, and may instead fill the pockets of politicians. Increase fines and duties won’t do it. This idea of cut, cut, cut government to a smaller size won’t do it. Cutting may help, but it won’t be enough to pay off our debt, and it may cause people to lose their morale and willingness to perform well at their jobs.

    So… what do we do?

    Simple: Implement Income tax – make it flat, simple, transparent like its done in Norway, and at the same time ensure that Caymanians are not bogged down by so many expenses that it is hard to live or do business here. In other words, before implementing Income tax, implement laws to ensure the tax goes back to the people and the money is not embezzled. Also, ensure economic stability. There is what is called – ECONOMIC BILL OF RIGHTS:

    The right of Employment, with a living wage,
    The right to have Freedom from unfair competition and monopolies,
    The right to Housing,
    The right to Medical care,
    The right to an Education, and,
    Social security

    These rights were one time declared by Franklin D. Roosevelt, but was never passed by the U.S. Congress. He die shortly after declaring those rights which he felt should have been combined with the other rights in the US Constitution.

    Before any tax, we should ensure that the well-off here does not us the system to their advantage over the little man. Right now, I believe they are using us as we speak. These hikes in fees, fines, and duties, got my antenna up. Who is going to audit where the monies go?

    Peace and Love

  2. to Hal,
    First of the gov’t does collect taxes they call duties…. I know you are referring to personal income tax but who will come to work here if they were taxed? I would go back to my home country if that ever happened and I’m sure 99% of the expats would too. The cost of living here for an expat is at its tipping point as it is…. the sandy beaches are becoming more and more expensive.

    Then there is also the ability or inability of a the gov’t to enforce and collect taxes.

    The Cayman Islands are synonymous with tax haven.