Editorial for 27 July: Unknowns are too taxing

To say that ideas submitted to us by Premier McKeeva Bush to
raise revenue for the Cayman Islands is a ‘sea change’ is putting it mildly.

The imposition of a 10 per cent payroll tax on expatriates
who make more than $20,000 while working here was a shock to residents and

And while Civil Servants at first thought they may have
escaped unscathed, they haven’t. Under the premier’s plan existing civil
servants would have to contribute around 25 per cent of the cost of their health
care premiums. Government would pick up the rest of the tab. But the spouses of
those civil servants would have to pay for their own healthcare coverage; not

The call has long gone up that the Cayman Islands Civil
Service needs to be trimmed and that those working for government do more to
pay for their share of healthcare and pensions.

That’s a fair way to help the Cayman Islands balance its

As for the payroll tax on the people who are here on work
permits, it has brought vast amounts of speculation from all sides of the

There isn’t enough known about the mechanics of the proposal
for people to begin emptying their bank accounts and packing their bags to
return to their native homes.

In the coming days the Caymanian Compass, cayCompass.com,
Observer on Sunday and The Cayman Islands Journal will attempt to dissect what
has been placed before us and give our readers and advertisers the answers to
the questions raised, including how such a tax would be collected, regulated
and administered. We have a public pension scheme in place that is in dire straits
because of the way it’s managed and enforced.

It’s too early to jump to any conclusions about this
proposed payroll tax and how it is going to affect our lives in the Cayman Islands
now and in the future.

We don’t know for certain if this is a smokescreen for
something more dire to come down the pipeline. It’s just too early to tell.

Unfortunately we find ourselves without a balanced budget
and at some juncture; Mother UK will step in and tell us how to proceed if we
can’t get our expenditures under control.





  1. The budget will only be balanced when the people of this island realise that the purpose of Government is to provide services, not to provide employment.

    For as long as the civil service think there is a magic money tree which will continue to fund their inefficient, bloated organisation, and for as long as politicians are too scared of their voting power to implement any meaningful economies, the budget will continue to run a deficit.

    The proposed payroll tax is probably illegal, will be wide open to abuse and avoidance, will be counter-productive, and will probably cost more to collect than it raises. How many more unemployables will need to be taken on to administer it?

    I’m sure form Mac’s point of view it’s a winner all round, more money in, no politically damaging cuts, and more jobs to give away to his west bay clients. Meanwhile the economy will decline further and those Caymanians in the real world who try to create wealth rather than consume it will see their businesses fail and their properties stand empty.

    There are some sensible things the Government could do to balance the books.
    Fully utilise the GAA building.
    Apply some commercial reality to CS contracts and hiring.
    Abolish the slush funds and stop giving money to client groups.
    Make Cayman Airways profitable by ending the free flights for former staff.
    Award a franchise for the building of a casino.

  2. I believe the Foreign Office called for sustainable revenue avenues not just reduction in expenditures.

    Cayman finances is already in dire straits and is the reason the Foreign Office has taken a hands on approach to correction. Although the Compass is very informative and seeks out answers to very pressing issues, they are not the the Premier, the Governor or the Foreign office from which we should expect our answers, unsolicited thereby unbiased.

    Proposing that there may be something more dire in the works suggest a conclusion on the part of the writer that the original proposal is dire.

  3. As a foreigner residing in New York and considers Cayman my other home (my wife a Caymanian), I don’t want to meddle in this issue of payroll tax on expatriots. However, your well thought out editorial gives much food for thought as it brings to the fore precisely similar situations existing in the USA. For example, as stated… the Cayman Islands Civil Service needs to be trimmed and those working for Government do more to pay their share of healthcare and pensions.

    It is a proven fact that top heavy government and taxation do absolutely nothing to balance budgets.

    This is precisely the problem in many cities and counties across America today. As a result, these municipalities are either declaring bankruptsy or heading in that direction.

    I agree with JTB in saying that the budget will only be balanced when the people of this island realise that the purpose of government is to provide services, not to provide employment. And of course, there is always a lot of fat that needs to be trimmed, which will cost effective and result in greater efficiency.

    The proposed payroll tax may well be counter-productive and a magnet for widespread abuse. Those intent on getting around this tax will certainly find loopholes and ways and means to avoid paying it.

    Much more needs to be known about the entire issue before any meaningful conclusions can be drawn. I eagerly await cayCompass.com addressing the questions raised on this matter and providing us with some answers.

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