Payroll tax included, revenues increased
Cayman Islands Premier McKeeva Bush said Wednesday that his government has sent details of a $592 million spending plan to the United Kingdom’s Foreign and Commonwealth Office for approval.
Mr. Bush said he hoped UK overseas territories minister Henry Bellingham, who has overall responsibility for the Caribbean territories, would have a “favourable response” to the proposal – possibly by today (Friday).
“The government can do no more,” Mr. Bush told a crowd of hundreds at West Bay’s Sir John Cumber Primary School Wednesday night. “We have done all that is humanly possible, but we have also done what is humanely possible.” According to figures produced for the current draft budget proposal, government anticipates $661.9 million in revenues with the 10 per cent payroll tax on work permit holders making more than $36,000 per year. The government was anticipated to spend $592.3 million for the year, which stretches between 1 July, 2012, and 30 June, 2013. Mr. Bush said that would lead to a net budget surplus of $69.6 million.
The Premier said the initial budget “frame” provided by the UK Foreign and Commonwealth Office sought an operating surplus of around $76 million and also insisted government’s capital expenditure for things like public construction projects should be no more than $50 million for the year.
There would be no long term borrowing measures within the government’s budget for the 2012/13 year, Mr. Bush said. However, there would be an additional $23 million in ‘equity investments’ and $33 million in capital expenditures. A level Mr. Bush said was “a historic low” in capital spending for the government.
“This is a great achievement for the government,” Mr. Bush said.
If the proposal receives a positive review from the UK foreign office, Mr. Bush said it was his intention to bring a budget to the Cayman Islands Legislative Assembly on 9 August – next Thursday. Cayman’s two-month temporary budget will expire on 31 August, giving lawmakers a total of 16 working days to study, debate and vote on the spending plan. Mr. Bush said his government had “not ruled out” a potential alternative to the proposed payroll tax, as long as it met the UK budget requirements.
“But we can’t get rid of debt overnight and more so it need to be understood that this debt has resulted in the Cayman Islands government owning assets that we cannot afford,” Mr. Bush said, referring to two new government high schools now under construction and the new government administration building on Elgin Avenue in George Town.
In addition, Mr. Bush revealed that the UK foreign office wished to see the government budget surplus in each year continue to grow beyond the proposed $69.6 million in 2012/13.
“They want that [surplus] the next year and the next year and the next year,” Mr. Bush said “These are the stipulations the UK has on us.”
One of the reasons for wanting the extra budget cushion is so that Cayman can fund public projects without having to resort to debt.
Until Cayman can readjust its budget surplus and debt figures to within acceptable levels, according to the country’s Public Management and Finance Law, the UK government will have the final say on whether its overseas territory can borrow any additional monies in the future. According to information presented by Mr. Bush Wednesday night, it won’t be until the end of the 2015/16 budget – four years from now – that Cayman’s cash reserves are expected to get back into line.