Expat tax debate engulfs Cayman

McKeeva Bush Cayman Islands main

Premier Bush’s announcement last Wednesday that the Cayman Islands government would seek to implement a 10 per cent 
payroll tax for work permit holders who earn more than $20,000 per year as early as next month has touched off a firestorm of controversy and plunged nearly 
everyone in the country – even those who don’t normally follow local politics all that closely – into a 
spirited debate.  

Mr. Bush followed up on Thursday evening, stating that the government’s budget process has “gone as far as we can go” and that Cayman was now awaiting a response on it from the United Kingdom’s Foreign and 
Commonwealth Office. 

“The FCO know the broad parameters of the budget,” Mr. Bush said during a broadcast address. 

Governor Duncan Taylor had a slightly different view. Mr. Taylor said Wednesday in a 
prepared statement that the UK Foreign and Commonwealth Office, while it has received some financial plans from Mr. Bush’s government, did not receive a detailed budget plan and was still 
awaiting those documents. 

“At this time, the [UK foreign office] economic advisor is still awaiting detailed proposals on the budget from the Cayman Islands government,” the governor said.  

Mr. Bush said that the UK “would not be satisfied with anything but a broadened 
revenue base that was to them ‘sustainable’.” 

“To meet that demand we proposed the community enhancement fee,” Mr. Bush said. “[The foreign office] know of the revenue projection of that proposal. The FCO economist went back to London with 
that knowledge.” 

Opposition Leader Alden McLaughlin said the UK had demanded no specific fee from the Cayman Islands government, but rather was looking for a more predictable and sustainable source of revenue for the overseas territory. 

“My sources in the UK have said there is no requirement that Cayman have a payroll or income tax,” Mr. McLaughlin said.  

 

Budget cuts  

Mr. Bush said that the Cayman Islands private sector – rather than supporting any new revenue measures – has “demanded” that the civil service be cut. However, he put the responsibility for that task directly on Governor Taylor. 

“The governor of this territory is responsible for the civil service, not the premier,” the premier said. “I do not hire – nor fire – nor do we sign any contract for any employed civil servant. The governor himself is better able to explain why the civil service levels are so high.” 

The premier said his government has made significant reductions in areas for which they have responsibility. 

“[The civil service] will now pay part of the cost of their health benefits,” Mr. Bush said. “Any new civil servant hired in the future will have to contribute to pension and health benefits. These are things the premier can participate in, so expenditure has been cut, but I cannot cut the civil service numbers.” 

Premier Bush said that if such a recommendation to reduce salaries or pay is made, he can then be the judge of that recommendation as minister of finance. 

 

Alternatives  

Mr. Bush also blasted Mr. McLaughlin for “misleading” the public and suggesting that the proposed 10 per cent payroll tax and other taxes and fees could be extended to Caymanians. 

“I rejected [value added tax], income and property tax and payroll taxes across the board in 2009 – I still do,” he said.  

“[Mr. McLaughlin’s] suggestion is nothing but him trying to gain points from this situation; this financial mess with the [UK foreign office] in control, that he created.” 

Mr. Bush said he had no intention to hit Caymanians “harder than they are being hit already”. 

“[Caymanians are not included [in the 10 per cent payroll tax proposal] for all the reasons I have stated many times.” 

 

Protesting  

Opponents of the proposed 10 per cent payroll tax on work permit holders in the Cayman Islands are organising a peaceful protest Monday evening. The levy, if approved, would only apply to work permit holders in the Cayman Islands.  

The demonstration is set to occur at 7pm Monday outside Mary Miller Hall in Red Bay.  

The time has been set just half-an-hour before a government meeting planned by Premier Bush as an informational gathering for those wanting to know more about the taxation issue.  

“This is your chance to speak out against Big Mac’s [referring to Premier Bush] crazy decision to introduce the ‘community enhancement fee’,” local businessman Nick Pitman wrote on a Facebook page concerning the event. “Bring your friends, placards, banners and a nice non-aggressive attitude.  

“Let’s show him how much we love Cayman and how we feel he is killing this beautiful place we call home, hurting the very people he claims to protect.”  

Proposals by Mr. Bush’s government on various topics have been met with public protests over the last few years, including the proposed divestment of the government office building, the proposed East End port and the proposed closure of a section of West Bay Road along Seven Mile Beach.  

However, most of those demonstrations have been led by Caymanians and members of local groups politically opposed to Mr. Bush’s government.  

 

Helicopter not sold  

The Royal Cayman Islands Police Service indicated Thursday that it had not discussed with government any plan to sell its patrol helicopter, despite a proposal announced by Premier McKeeva Bush on Wednesday.  

Mr. Bush said in a broadcast address that selling the aircraft would save the Cayman Islands about $1.7 million per year in operating costs. It was mentioned among a number of other proposals aimed at reducing the government’s budget.  

“The sale of the police helicopter has neither been discussed nor has the impact of its loss been subject of any input by the RCIPS,” a police spokesperson confirmed Thursday afternoon.  

“The loss of the Air Operations Unit would have a considerable impact on our ability to maintain our current level of operational effectiveness.”  

The police helicopter, a 1999 Eurocopter model craft, was purchased by the police service in 2007 for $1.8 million. However, it took the Cayman Islands government nearly three years to bring the vehicle into the country after obtaining necessary aviation safety approvals for its use.  

Since March 2010, the helicopter has assisted in numerous search and rescue missions, as well as suspect searches and arrests on Grand Cayman.  

The aircraft and the RCIPS air operations team recently received certification to participate in ‘air ambulance’ missions as well. “We are seeking urgent clarification from government on this matter,” the police statement read.  

McKeeva Bush Cayman Islands

Mr. Bush

Governor Duncan Taylor

Mr. Taylor
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28 COMMENTS

  1. Sale of helicopter

    I’m not quite sure why the police paid 1.8 million for an 8 year old helicopter that new costs about 2.5 million. Or why they bought it and then sat on it for 3 years waiting for clearance to use it.

    But Premier Bush seems to be off on his projected savings if it is sold.

    According to the limited research I have done the annual running cost of a helicopter depends on the number of hours flown. Just like a car, the more you use it, the less the cost per hour.

    Here is an extract from the numbers I found:

    Based on the above numbers, if you OWN an EC130 and fly 125 hours per year, you should plan on paying 1,194 per hour / 149,250 per year.

    If you fly 500 hours per year (10 hours per week), plan on paying 858 per hour / 429,000 per year.

    These number do not include local taxes you will have to pay on an aircraft that if new, is worth around 2,475,585
    These are USA numbers and do not include the cost of the pilot.

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  2. One regular poster here, by the name indigenous has loudly proclaimed and CAPITALIZED HIS CLAIM TO A CAYMAN REVOLUTION!!!

    It looks like he’s getting his wish, but as I pointed out to him a couple of weeks ago, I’m having an awful lot of good fun watching the action from THIS SIDE OF THE ATLANTIC!!!

    Good Luck Cayman (you’re going to need it).

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  3. The Cayman Island government is not the only one to spend more than it takes in revenue.

    The USA only collects about 2/3 of the money it spends and borrows the rest. Many other countries are no better.

    But the Cayman Islands will be unique in the world as the only country that levies an income tax on foreign workers while excluding its own citizens.

    Thus those who pay taxes can’t vote and those who don’t pay taxes can vote.

    This move has been reported worldwide, as far away as the China Post and may be the end of the attractiveness of the Cayman Islands as a tax haven.

    Of course some expats will leave, either because they can no longer afford to live here or as a reaction to the plain unfairness of this plan.

    To those who suggest that they can return to the crime ridden dumps they came from be assured that many expats came from countries that are quite delightful to live in.
    Slightly higher crime perhaps and lacking in beautiful beaches. On the other hand they offer art galleries, museums, theaters, mountains, rivers, cities with shopping.

    True they will have to pay income tax. But they get something back for their money, including free health service and education for their children. By the time you factor in the lower cost of living and they will be no worse off.

    What will happen to Grand Cayman when they leave?

    Less traffic, more empty rental homes than Caymanian owners will lose to the banks, less work permit fees, less import duty, less companies based here.

    Ultimately the government will need to make up the difference by taxing Caymanians. So don’t cheer too loudly, they are coming for YOU next.

    However I do applaud the removal of the need for pension contributions by work permit holders. It was always wrong to force people to pay into a pension scheme when by law they can never retire here.

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  4. Longtermresident,

    Please add insurance, depreciation and the operator/pilot cost. I also suspect that fuel, maintenance and CIAA fees are significantly higher in Cayman. This also does not include any interest for financing it which may or may not be the case.

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  5. This whole debate has been going for days now and it is such a shame. I wonder if a great deal of unrepairable damage hasn’t been done already? The discussions between caymanians and expats, the comments and the animosity created is horrible to see. It once was such a nice place with such friendly people, a place I wanted to go to!

    My wife and I were planning the big move ourselves, probably for the beginning of next year. We have visited the Island numerous times and are selling up at home with the intend to make the move ourselves…

    Now… for starters I don’t feel welcome anymore ?? Apart from the whole tax debate, Crime being on the rise and a seemingly incompetent government, al these things we could have probably handled because like many others, we just love the Caymans (People Islands). But the uncomfortable feeling of not being welcome is a lot harder to deal with. Why, after all, go to a place where they don’t want you?

    So anyway, we have decided, to go elsewhere and try our luck in a place were people will still smile at us.

    Just a mathematical thought…

    We are selling two houses (one is already sold, second on the way) and would have brought about 450.000 to the island. The idea was to by a property more or less outright and get a mortgage to buy a second one as an investment. We both had jobs lined up and would be earning about 8000 a month between the two of us. Further to paying insurances, mortgage, Utilities, etc… we would probably try to save about a 1000 a month (which would be fairly hard because we like spending 🙂 So…It doesn’t realy matter if it’s utilities, insurances, shopping, mortgages, etc… but of the monthly 8000, about 7000 would flow back to the Island one way or the other. Over 12 months that makes 84.000 an investment of 450.000 makes a grand total of 534.000

    Guess it will be spent elsewhere… And I am sure we are not the only once, or the biggest once (investment wise) who think like this…

    Taxing us would have brought the government 9600 over the year (8000 * 10% * 12 months). Chasing us away cost the Island 500.000

    Just my humble thoughts…

    To finish I would like to wish everyone on the Island Caymanians expats alike, the best of luck and a lot of courage dealing with this crisis. Stand up for yourselves and don’t let them bring the Island down even more… Remember where you came from, and I am not talking about your ancestors! Try to remember the Island a couple of years back. The atmosphere, the kindness, the safety, the peace, the beauty… Who has taken it? and who should should be held responsible for bringing it back ?

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  6. The Premier has used divide and rule for so long that he knows not where to draw the line. Dog eat his supper on this one. No sane UK government can turn a blind eye on this major violation of human rights. This is even beyond discrimination.

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  7. Mr Bush is under investigation by the RCIPS… so what does he do… takes away the police helicopter!

    Note carefully that Mr Bush states that any NEW civil servants hired in the future will have to contribute to healthcare and pension costs. QED existing civil servants can continue not to contribute. Thus the current saving is… zero!

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  8. hi OldDiver all expats who are protesting over this community enhanement fee.
    yes Revolution has come only just begun.
    olddiver am happy that you are having a lot of fun on your side of the ocean just like i am sure all those who are threating to leave due to this fee will.
    All I ask is after they protest the Honorable Premier McKeeva Bush that they stop the threats leave.
    Let them prove to themselves the rest of the world who they are preaching this to,what they have been saying all along that Caymmanians cannot / will not be able to survive without them.Cayman will turn into a dust bowl never to amount to nothing due to the fact that Caymanians are incapable / ignorant to contribute to Caymans success well that is to say this success can only happen with the superior intellect of the expats.

    so I just ask please do go ahead leave Cayman just watch from your side of the ocean Cayman dwindle to nothing. Of course I beg to differ believe that we Caymanians will fare well with out most of the expats who are still just threating to leave. But the only way to prove this is by the expats leaving so please leave !!
    As for the REVOLUTION sure it has arrived it is here to stay stay it will the only way to stop it now is for ALL CAYMANIANS to leave, am sure a lot of expats will love this to happen.
    Any way CAYMANIANS WILL PREVAIL WIN THIS REVOLUTION its only a matter of time,and CAYMAN WILL PROSPER !!!
    so take care

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  9. This appears to be another tweak to annoy the governor. If Bush keeps this up Cayman may end up like Turks.

    It is more sensible (rather than driving out the expats who keep the international service sector employing thousands of well-paid people) to elect someone other than Bush who has no fewer than three anti-corruption proceedings dogging him.

    There are also far too many government employees (who he is obviously courting for votes) and this should be the prime target for budget balancing!

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  10. Most of the foreigners living in the Cayman Islands knows a little about taxes. When it starts, Governments get use to it and it will only go up from then. Within a few years, Government employees behaviour will make it their duty to get more and more. So higher taxes will be required and at that time, the Caymanians working for private companies will be requested to pay taxes. And, soon after, the government employees will have to pay their shares as well.If you do not agree with this comment, please provide info as where the reverse attitude happened.

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  11. To Indigenous …

    You might want to re-think your name. Under the UN definition, the Cayman Islands have no indigenous population at all.

    You might also want to think about going back to school and brushing up on your English language skills. Just a thought.

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  12. I hope the expats that where REPLACED by Caymanians who had degrees and was unfairly deprived from a job because of prejudices, are the same expats that decide to leave. Because once they do leave, they will be REPLACED! A new name for them – the REPLACEBLES! 🙂

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  13. I just want to say, I hope all those who are telling the expats to leave are missing the fact that if they leave, so does their 10% payroll tax to the government and so does their work permit fees, that are paid to the government. So in essence, if they leave, Cayman loses even more money…

    Let’s not lose focus that according to the premier, the UK wants sustainable revenue…that is the issue.

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  14. watersedge, speak the truth. If they have this tax, some expats will leave, some will stay, and those vancancies will be REPLACED. Viola!

    You just upset because you make your money and send it overseas. Its not circulated here like it should. For all I know, you make well over 40,000 a year, and you drive a car that is owned by your company. Just fact it! Whereever you go you will find nothing is for free.

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  15. Watersedge, not all expats send money overseas!! I don’t have enough to send overseas – I don’t own a home or drive an expensive car. I work to live not live to work. Sure, some expats will stay but make no mistake that they will not be spending the kind of money locally and all the families that expats bring in for tourism etc. will not come either. When the government starts taxing the Caymanians because there is not enough expats to tax (don’t forget the work permit fees will not be coming in either), guess who they are going to tax? YOU. How is this plan he has sustainable income? Quite simply, it is not and gullible people like you soak up McKeeva’s rantings and ignorance. It is a lose/lose situation. Have you ever visited the US, Canada, UK, etc? Have you done any research whatsoever on economics? Maybe if you invest some of your time into gaining more knowledge on world finance and economics (including in your own Country), you may then have a wee bit of credibility on what you post other than sounding like an uneducated and bitter person. Obviously, there are a number of intelligent Caymanians who understand the consequences and the damage that has already been done. I suggest you contact them for some guidance. I have met some very lovely Caymanians and I truly feel sorry for you as this government is creating a rift where there shouldn’t be any and a future that is very unstable.

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  16. Can we all agree that Caymanians should be allowed to decide what type of tax, if any, should be implemented in the Cayman Islands?

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  17. Apprentice,

    I’m Caymanian. I make under 40,000 a year and do not drive a car owned by my company.

    I think you’re still missing the point that even if Caymanians replace the jobs of expats, that still leaves the government with less money from the 10% payroll tax and work permit fees…when you think about it, the government actually needs the expats to sustain their budget.

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  18. MackB, of course Caymanians should be allowed to decide what type of tax, if any, should be implemented in Cayman. The questions are (1) whether Caymanians want Cayman to be known worldwide as a place that harbours discrimination and spite toward others by implementing a direct tax that will only be imposed on non-Caymanians, and (2) whether imposing any type of direct tax in Cayman is a wise thing to do for the economic future of the islands. It seems obvious to me that announcing to the world that Caymanians are hostile toward non-Caymanians is not very wise when the islands’ economic bread is buttered by non-Caymanian tourists and investors. And it seems obvious to me that implementing any type of direct tax in Cayman will cause it to lose its competitive advantage over other jurisdictions. But, as you said, my views don’t matter much because I’m not Caymanian and can’t vote. I’m optimistic, though, that the people of Cayman will recognize that this tax is mean-spirited and not Christian-like, and that it would have disastrous long-term econcomic consequences.

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  19. bobgilson11,

    I regret that you misunderstood my previous posting. Nowhere in my message did I indicate that yourviews don’t matter because you are not Caymanian or can’t vote.

    The government made a mistake (in my opinion) by not consulting a very important segment of the society before proposing the Community Enhancement Fee. However, I still think that Caymanians must be allowed to decide what future they want for their Country.

    Many of the comments that I have read clearly expose the disdain that many expats have for Caymanians and express an unhealthy sense of entitlement.

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  20. What Expats and those who have lived with direct taxation know and are concerned about is that when the wall is breached into direct taxation it will only be the beginning. Expect further forms of direct taxation impacting everyone in the country including, income tax, school tax, property tax, VAT tax, capital gains tax, payroll tax just to name a few. These may not all occur immediately but the government’s need for money is insatiable and there is never enough. If Caymanians believe direct taxation will only impact foreigners they are in for a rude awakening.

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  21. I am Canadian. I own property in Cayman, and I have planned to build a home and semi-retire here, build my own wooden cat-boat, join the Masons, and perhaps have a small handy-man service on the side. I have visited your island many times, have friends down here, and really looked forward to spending my golden years as a productive member of Caymanian society. Well, this debate saddens me. It seems to open up an us against them attitude, pitting the Caymanians against the ex-pats, and drawing attention away from the real issue- government over-spending. Each of you readers has monthly income and expenses- and you know they must balance. The current government seems to have lost sight of that, and the results will be a disaster. Please think carefully about implementing this 10% tax, as it will only destroy what you have laboured so long to create. Cayman will remain a place of beauty, but it’s soul will be badly hurt.

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  22. Longtermresident – you need to realise that the RCIPS flying cost-center is an even-more expensive EC135, not a 130. This is a bigger and far more expensive helicopter to run.
    I see that the UK is getting rid of many of their Police helicopters to save money too. WHAT A GREAT IDEA. Get rid of ours too. I seem to remember that it was the idea of the last Police Comisioner. He got the boot, but not his helicopter.
    Tax all expats at 50% of what theyd pay at home. They’d still be happy and we would get some income to pay for things like the helicopter.
    Why should the UK be bailing us out all the time? We must become a financially viable country and we can only do that by taxing the workers who elect to live here to evade paying tax at home.
    Also, while we’re at it, let’s get a Premier without his own personal financial agenda!!!

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