The leadership of the Cayman Islands Tourism Association understands the need for sustainability and fiscal prudence, and that to be credibly sustainable the government’s budget will require a mix of Government expenditure savings and strategies to increase Government revenues.
The government’s consumption based tax model works and increased revenues can be generated through innovation and stimulation of the Tourism Industry along with the Financial Industry in Cayman.
Increased flights with new gateways, Medical Tourism, re-opening the derelict properties of Hyatt, Divi and Courtyard will pave the way to Government and Private Sector sustainability.
Product development such as the Kittiwake and international culinary events are contributing to increase Cayman’s market share, as are creative investment vehicles in the financial sector. Ambitious goals need to be set in both pillars of our economy and tactics to evolve beyond the status quo will be required.
In regard to government expenditure savings, CITA urges the Government to look at what the country can afford and find a way to decrease these costs as government spending cannot continue to grow at the continued rate. Tourism businesses will do their part, but without any demonstration of financial discipline from government, without a core understanding of where government revenues are derived and little recognition that there is a line that should not be crossed, no sympathy or support will be given to any new taxation proposals.
CITA’s strong objections to the Community Enhancement Fee are that it is grossly unfair and divisive in that it targets only foreign migrant workers in the private sector, and furthermore it encourages those workers to not make provision for their eventual retirement.
Divisiveness amongst a cosmopolitan society such as ours runs counter to the aim and necessity of maintaining a harmonious community in the Cayman Islands. Failure to plan ahead for retirement also runs counter to the necessity of ensuring that every worker in the Cayman Islands makes provision for their eventual retirement. Indeed some of those persons who would be impacted by the Community Enhancement Fee may well become permanent residents and eventually citizens of the Cayman Islands therefore if adequate provision is not made for their retirement now, they could later become a burden on society as a whole and Government’s social services in particular.
CITA does not support consumption tax revenue measures such as value-added tax or sales tax as this duplicates the current system of import duties. An additional VAT Tax in addition to import duties would cause significant percentage increases in the cost of living, significantly increase the cost of doing business in the Cayman Islands and ultimately tarnish the destination to visitors as extortionately expensive.
CITA has examined the tourism industry to see whether there is scope for additional revenues to be raised from tourism and concluded that it would be very damaging to the industry if tourism were targeted for yet more taxation. Already the industry is bearing a heavy burden comprised of taxes and fees such as: the 10 per cent Tourist Accommodation Tax that is collected from guests and paid on every tourist rental of every room or condo, hotel and other accommodation license fees, the per-passenger departure fees charged to cruise lines, various fees and taxes charged to airline travellers for which the Cayman Islands is already the most expensive in the Caribbean region, plus many other fees paid to government such as for work permits in what is a very labour-intensive industry. Existing tax structures in place are capable of generating the Government revenues needed through performance based results.
CITA is opposed to any direct taxation of any kind until all other means are exhausted. The immediate solution is to reduce Government spending to what the country can afford and control future spending to be in-line with the GDP.
The sustainable answer lies with increasing our air and cruise arrivals, per visitor spend, repeat visitation and increasing our market share within the region.
The CITA is meeting with Premier Bush to gain more information and to present the position of the Tourism private sector.
Cayman Islands Tourism Association