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.
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.
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.”
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.