Mr. Bush said there would be no cap on the tax; work permit employees have to pay 10 per cent of their salary in tax no matter how high it is.
Although not all of the details are worked out, the plan involves a simultaneous suspension of the Pensions Law for work permit holders. However, Mr. Bush said employers would have no obligation to pay any of the payroll tax.
The effective tax rate of the discussed plan would be 9.52 per cent of their current gross salary for work permit holders if employers pay half. If employers don’t pay any of the money they save from not contributing from their work permit holders’ pension plans, the effective rate of taxation will be 14.28 per cent for salaries up to $60,000.
Leader of the Opposition Alden McLaughlin said instituting a direct tax would have serious implications for the Cayman Islands.
“I’ve never known of any tax that didn’t get expanded or that goes away,” he said. “Once we go down that road, it’s only a matter of time before it expands. This is something no one in Cayman ever wanted to contemplate.”
Mr. McLaughlin said the cost of government expenditures has been exceeding government revenues for some time.
“The trajectory that we’re on… is just not sustainable,” he said. “We didn’t need the Miller-Shaw report to tell us that, but it told us that.”
The problem is spending, not revenues, Mr. McLaughlin said.
“This government, despite all the rhetoric, has done nothing really to reduce the expense of government.”