Premier postpones budget meeting

McKeeva Bush Cayman Islands main

Update 7:50pm: Citing “ill-temper abroad” Premier McKeeva Bush cancelled Monday night’s public meeting at which the large gathering of expatriates and Caymanians concerned about the new payroll tax were expected to attend.  Approximately 50 people were on hand at Mary Miller Hall after organizers put out notifications over social media that the meeting had been cancelled.  Organisers expected several hundred on hand if the meeting had gone ahead. 

Premier McKeeva Bush has postponed the public meeting to explain the expatriate payroll tax set for Monday evening at Mary Miller Hall.

The meeting has been rescheduled for Wednesday, 1 August at the Sir John A Cumber School Hall at 7:30pm.

Organizers have said that the meeting appeared to have been moved from the original, neutral location in Red Bay to the Premier’s home turf of West Bay.

Check back with cayCompass.com for more on this developing story.

To view the entire statement by the Premier, please click the thumbnail below.
 

Premier statement sm
 

McKeeva Bush Cayman Islands

Mr Bush
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11 COMMENTS

  1. I think it is probably the single greatest existential threat to the Cayman Islands in over 200 years. Students of business and government often refer to how a company or a country makes money as the business model. Understanding the business model of a country, enables one to make choices that enable the country to succeed. Misunderstanding the business model can lead to existential threats.

    The business model of a tax free jurisdiction is to be tax free so as to attract businesses that would otherwise have located elsewhere — and in place of taxes to attract fees from the companies and any expat employees with specialized skills that these businesses may employ (in addition to Caymanian people they would employ but for whom there would be no fee to the government). It is the combination of company fees, expat fees, import duties, etc. etc. — all indirect taxes — that make it possible for no one (whether they are Caymanians or expats) to pay direct taxes. It is also these fees which fund MLA salaries, compensation for civil servants, unemployment benefits, social services, police, schools, roads etc.

    The moment a tax free jurisdiction introduces a direct tax, any direct tax — whether on Caymanians or expats — it ceases to be a tax free jurisdiction and it signals to investors that it has entered the slippery slope of a taxable jurisdiction. As Anthony Travers states, The confidence placed by investors in the tax free status of the Cayman Islands is based, not simply on legislative structure, but on a belief that the core philosophy of the Cayman Islands’ people would always find direct taxation repugnant. Once this belief is violated — through the precedent set by a direct tax, any direct tax (such as the one proposed by the Premier last week) — companies and investors seeking a tax neutral jurisdiction will locate elsewhere (in other tax neutral jurisdictions), and over time the fee income will disappear completely. For every dollar of fee income that disappears, the government will have to replace it with a dollar of taxes. Once virtually all fee income is gone, almost all government revenues will have to be raised through direct taxes. Since most international businesses will have left at that point, the base of expats will be very low and the expat fees will correspondingly diminish. To pay for government expenses at that point — MLA salaries, civil servants, unemployment benefits, social services, police, schools, roads etc. — a direct tax will have to be applied to both Caymanians and expats.

    At that point, the Cayman Islands will — from a business model perspective (again, how the country makes money) — be virtually indistinguishable from old Mother Jamaica. There will be tourism revenue — but virtually no company and expat fee revenue — and both Caymanians and expats will be taxed. The 47,000 per capita GDP of Cayman will also — as these events unfold — fall towards the 5,402 per capita GDP of Jamaica. As income declines — and the economic activity created by international businesses rapidly diminishes — unemployment will rise. As unemployment increases, crime goes up — just as in Jamaica.

    It has taken several decades of far-sighted Cayman statesmen (and stateswomen), and the Caymanians who proudly supported them and sacrificed for this vision, to rise Phoenix-like out of the ashes of Jamaican administration — and to create a per capita GDP that is exponentially higher than that of Jamaica (with far less crime and a much higher quality of life).

    The path to eliminate these decades of Caymanian progress — to begin the slow but irreversable process of abandoning the tax free model and becoming a taxable jurisdiction like Jamaica — began less than one week ago with the proposal to introduce direct taxation in Cayman (in this case on expats). All that’s required to complete the journey is to ratify and implement this direct tax — and Cayman will once again begin the journey towards Jamaican conditions.

    Of course, no one will gain from this situation — Jamaica as a country will be no better or worse off than it is today, the Jamaicans in Cayman will likely experience more unemployment and lower income, and the Caymanians in Cayman will regress towards the economic condition of Jamaicans living in Jamaica.

    In summary, the business model of a tax free jurisdiction is to remain tax free — and it will maintain a standard of living like other tax free jurisdictions. Once it ceases to be a tax free jurisdiction, it will tend to regress towards the status of other neighboring countries — in the case of Cayman, that neighboring country is Jamaica.

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  2. Took only days to get hundreds to audience with the premiere.

    And the premiere made preparations to go to an organized demonstration against his policy.. Home turf?. Common sense!.

    Ground rules: No tea bags allowed in the hall and all shoes should be checked at the door..

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  3. This note is addressed to Progress, who posted at 8:34 last evening.

    Please submit your comment as a full Letter to the Editor/Viewpoint/Note be read on-air to all of the media outlets in Cayman. If you are a Chamber member please submit it to them. Please submit it to all MLAs. What you have written needs to reach as wide an audience as possible as many times as possible. Thank you for posting your views.

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  4. @caymanian-on-guard

    Do you really think people would be silly enough to risk arrest by throwing their shoes at Premier Bush?

    Sad fact is that he has painted himself into a corner with this one. It would be political suicide for him to do an about face on this one, even if he wanted to.

    So ex-pats should start crunching numbers to see if they should stay or go.

    Landlords should get ready to reduce rents.
    Let’s take a family making 5,000 CI per month and paying 2,000 CI a month in rent.
    They will now be faced with paying an unexpected income tax of 500 CI per month.
    One way to cover this will be a 25% rent reduction (25% of 2,000 = 500).
    Is this better than having an empty home?

    Of course this will only work in the short term. As another poster (Progress) explained, Cayman has now lost its reputation as a no direct tax jurisdiction.

    The writing is on the wall for more direct taxes in the future as the government will need to make up for the loss of many work permit fees. And these will inevitably be levied on Caymanians.

    The party is over folks. It was a great ride while it lasted.

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  5. @longtermresident: Just trying to lighten up. If there is one thing we are known for, it is peaceful assembly.

    But just in case I suggest Premier Bush get some ducking advice from President Bush..

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  6. This is in response to Jose P. who posted on 7/31/2012 8:57:01 AM in which you said:

    Please submit your comment as a full Letter to the Editor/Viewpoint/Note be read on-air to all of the media outlets in Cayman. If you are a Chamber member please submit it to them. Please submit it to all MLAs. What you have written needs to reach as wide an audience as possible as many times as possible. Thank you for posting your views.

    Given the widespread reports on threats and potential reprisals against people who speak out — and the inability of the police to effectively curtail this behavior — it is not prudent at the present time to accept your invitation.

    However, if it would be useful, I hereby authorize you, the Caymanian Compass as well as the Cayman Free Press and any of its publications to use this comment in any and all editions — whether online, printed, audio or TV.

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  7. I don’t know the identity of progress, but I suggest he or she run for government. I would love to see someone with both business- and common sense replace the person attempting to run this country.

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  8. This message is in response to the one posted by caymer on 8/1/2012 9:51:38 AM

    Thanks for the suggestion. I am personally fully committed with business activities so I will not be able to participate.

    However, I think it would be a great idea for a new generation of leaders — such as business people and young people — to start a new political party in the Cayman Islands to create more effective, innovative governance.

    First step could be a pledge — to be signed by all political parties — to never introduce direct taxes.

    The second step could be to create alternative sustainable revenue sources — such as a national Caymanian lotto, a 10 fee for passengers arriving in the airport or a US / CI exchange fee. There are plenty of options for generating sustainable revenue that do NOT involve a direct tax.

    The third step could be an initiative to ensure full employment for all Caymanians. This could involve skill training and accelerated job placement activities. For example, Codecademy offers free training in learning how to develop computer programs (http://www.codecademy.com/). The government could encourage study groups and job fairs for students who have completed this training.

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Comments are closed.