Editorial for 31 July: A culture of taxation

We’re still waiting for the salient details of Premier
McKeeva Bush’s expatriate payroll tax proposal before commenting further on the
specific plan.

However, there is a significant issue that we feel has been
largely overlooked by government to this point – although it has not escaped
the notice of many who posted website comments on cayCompass.com or who wrote
letters to the newspaper regarding the payroll tax.

In order to implement such a tax, some form of administration,
collection and delinquency enforcement within government will be necessary. Put
another way, Cayman may need the equivalent of the US Internal Revenue
Service. 

Frankly, we believe setting up such a bureaucratic process
will take far more time than the end-of-August deadline set by Premier Bush for
the payroll tax.

While many expatriate workers who are subject to this tax
may have experience in paying similar levies in their home countries, it is
entirely possible the Caymanian business owners who employ them may not have
that same experience. There is a question of how those business owners will
deal with heretofore unseen levels of government imposition into their payroll
records and company affairs.

Basically, there is no culture of taxation in Cayman,
certainly not for something like the payroll tax as proposed.

Without such a culture, we wonder how this system is to be
implemented in short order with any credibility whatsoever.

More likely, what will occur if these issues are not addressed
is a repeat of what happened with the national pension system: The responsible
employers will police themselves and do what is required, but what kind of
penalties, if any, will be imposed on those who are non-compliant in collecting
the tax or who collect the tax and are non-compliant in paying it to government.

 

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4 COMMENTS

  1. Very true. And as soon as this tax is implemented, the larger companies will find ways of diverting payroll in other ways and will not pay it. As Tony Travers said on Friday – this is not an EXPAT tax – either way it will affect business who will have to inflate salaries to keep good staff and/or expats will stop spending as much in the local economy. Tax – period – is a bad idea. The only unique selling point Cayman has is its tax free jurisdiction. Let’s not mess with it.

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  2. Taxes of any kind will begin the long demise. What Bush is offering with the beginning of direct taxation is similar to Eve offering up the forbidden fruit. Don’t eat the apple Caymanians, you are living in Eden, keep it that way!

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  3. you hit another point within this: Many expats are experienced in paying tax and with this comes knowledge on how to avoid paying tax (most of the time legally). Cayman would have to start from scratch whilst personally I can think of at least 10 ways one could avoid paying it based on UK schemes. Never going to work, even if they collected every penny from day 1.

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