Premier McKeeva Bush is replacing the controversial expat tax with increased work permit fees and a number of other revenue raising measures.
At a packed meeting in Mary Miller Hall in Red Bay Wednesday night, 8 August, Mr. Bush announced that the increase to work permit fees above $1,000 would earn the government $7.6 million in the current financial year.
The premier said that work permit fees of between $1,000 and $2,999 will see a 5 per cent increase; work permit fees from $3,000 to $3,999 will increase by 10 per cent; fees between $4,000 and $4,999 will go up by 15 per cent; fees from $5,000 to $5,999 will increase by 20 per cent; fees of $6,000 to $7,499 will increase by 25 per cent; fees of $7,500 to $14,999 will go up by 30 per cent and fees from $15,000 to $24,000 will go up by 35 per cent.
Among other new revenue measures Mr. Bush announced are increases to the tourism accommodation tax from the present 10 per cent to 13 per cent; departure tax will go up by $10 per person; stamp duty on certain insurance policies will earn the government $1.2 million this year; and changes to master hedge fund registration fees will bring in $2.3 million.
The government also expects to earn $9 million from an increase in the annual registration fee payable for exempted limited partnerships.
Mr. Bush said the increases in the work permit fees would affect real estate sales agents, financial controllers, accountants, managing directors and chief executive officers. “Those are the group that will bear the burden of the work permit fees,” he said.
Mr. Bush said the government proposes reverting to the previous stamp duty regime of 7.5 per cent for Caymanians and non-Caymanians.
Caymanian first-time buyers of land worth up to $100,000 or homes worth up to $300,000 will not have to pay stamp duty. Caymanian first-time buyers purchasing land for between $100,000 and $150,000 or houses or apartments for between $300,000 and $400,000 would pay “a reduced rate of 2 per cent” stamp duty, Mr. Bush said.
said pension contributions for work permit holders in the private
sector would no longer be mandatory, as he had previously announced.
The premier said there would be increased traffic regulatory fees during the current fiscal year, but he did not elaborate on what those would be, other than they would raise an estimated $6 million.
Owners of leisure or non-commercial boats of over 30 feet long will pay a fee that would earn the government about $500,000 in this financial, Mr. Bush said. That fee would increase depending on the length of the boat.
These proposals were among several brought to the government by a private sector group late last week and during this week, Mr. Bush said.
“In aggregate, the proposed alternative revenue measures proposed by the private sector group are expected to generate $44.3 million in 10 months and $53 million in the full year,” the premier said.
The Cayman Islands government was forced to implement a two-month temporary spending plan in July to keep the public sector operating until a full budget for the financial year 2012/2013 could be approved.
Mr. Bush said the United Kingdom Foreign and Commonwealth Office wants Cayman to have a projected operating surplus of $76 million. With the new proposed revenue measures, along with cost cutting and other revenue raising proposals announced by Mr. Bush earlier, the Cayman Islands Government had achieved a projected operating surplus of $70 million.
The premier said the Foreign and Commonwealth Office had requested Cayman to make further cuts
“I am hoping to get a favourable reply from the Foreign Office by Tuesday of the coming week and deliver the budget to the house [Legislative Assembly] by 20 August. That only gives us 11 days to get it done.” Mr. Bush said.
Administration officials said last week that Cayman only has spending authority through 31 August right now, and that another temporary budget might be necessary. By law, Cayman can have a temporary budget up to the first four months of any fiscal year.
Although the tax on expats’ salaries of more than $36,000 has been taken off the table and replaced with the new measures Mr. Bush announced Wednesday night, other measures such as civil servants paying towards their pensions and health insurance coverage remain in the government’s revenue plan.
For more on this story, read Friday’s Caymanian Compass.
Editor’s note: This story has been edited to include the details regarding stamp duties and pension contributions for work permit holders in the private sector, and further clarified.