Panel: Short-term fees unavoidable

Generation Now meeting main
While none supported the imposition of a payroll tax in the Cayman Islands, a debate panel agreed Thursday that some form of fee increases or taxes is inevitable to keep the country afloat in the short term.

The panel, hosted by non-profit group Generation Now, included Opposition Leader Alden McLaughlin, North Side MLA Ezzard Miller, former Deputy Governor Donovan Ebanks, Cayman Finance Chairman Richard Coles and UCCI business professor Bob Weishan.

Representatives from the ruling United Democratic Party government were invited to attend the conference, but said they couldn’t make it.

Four of the five members, including Messrs. McLaughlin and Miller, agreed there should be some increase in government revenue measures. However, they did not agree on the form those charges should take.

Professor Weishan said he couldn’t subscribe new fees or budget cuts for the civil service until someone determined whether government was getting value for money out of all the services it provides now.

“The key question is ‘how does Cayman grow in the future?” Mr. Weishan said. “It seems to me we’re just hoping that we’ll get back to the good old days and maybe the good Lord will take care of us.”

Mr. McLaughlin said he agreed with statements made recently that a 10 per cent payroll tax for work permit holders would have been ‘fiscal suicide’. However, Mr. McLaughlin said some new fees are needed.

“There is no question that now we will have to resort to new revenue measures to be able to meet what the UK is insisting we meet,” he said.

Mr. Ebanks said the additional fees were largely a “by-product” of not having government’s annual budget in place in a timely manner. The current budget year started on 1 July and Cayman was forced to enact a two-month temporary spending plan so the country could keep operating until lawmakers approved a full year budget.

Mr. Miller said the UK’s requirement that Cayman have three months – or 90 days – cash reserves within the budget basically forced new fees to be added.

“I don’t see how we can cut as much expenditure to generate that much cash in this current year,” he said. “But we still have to cut back expenditure to a more reasonable level.”

Mr. Miller said government’s first proposed budget for the 2012/13 year came in at $498 million in expenditures, while the most recent draft sent to the UK totaled $592 million.

The government needed to have “open and frank discussions” about why it required this level of expenditure, he said.

Mr. Coles of Cayman Finance said it was “too late in the day” to make serious expenditure cuts in the 2102/13 budget.

“In the end, that additional revenue is unavoidable,” he said. “We recognise that….and it is our industry that is going to bear the brunt of that [referring to the financial services industry].

“We’ve got to be very careful though, if you squeeze to hard, you might actually kill it.”

Generation Now meeting

Generation Now panel members Thursday were [from left] North Side MLA Ezzard Miller, UCCI professor Bob Weishan, Cayman Finance Chairman Richard Coles, Opposition Leader Alden McLaughlin and Donovan Ebanks. Photo: Brent Fuller

1 COMMENT

  1. As Mr Miller well knows, as a former member of the Executive Council, the rule that the Government should have 3 months cash in reserve goes back a very long way – it was a given in Colonial arrangements. It is prudent, sensible and shows external potential investors that the Govt takes its responsibilities seriously. It also indicates to external investors that they too can take the Govt seriously.
    Mr Miller must have been aware of this – or is this a convenient lapse of memory?

  2. @ OldHand – Steady on. I was there and I don’t think Miller was suggesting that this was some new requirement imposed by the UK. He was merely explaining that the requirement to have 90 days cash is what required the imposition of new fees.

  3. Donovan Ebanks?

    On 15 July 2009 Mr Ebanks, them heading the Portfolio of Internal and External Affairs, wrote to Dan Duguay (and I quote from a copy of the actual document released under FOI) – I must confess that each time I have read the report with the intention of commenting, it has so annoyed me that I felt it best to not do so in the mood that it generated.

    The memo then rambles on slagging off Mr Duguay for daring to question the open-ended budget that Mr Ebanks appears to have approved for Operations Tempura and Cealt.

    OK, this a senior civil servant (albeit now retired) responding on the record to an Auditor General who was just doing his job but who was later sacked simply for daring to cross the line with a challenge to the CIG hierarchy when they got things wrong.

    Generation Now? I doubt it, more like the Old Guard closing ranks to protect themselves.

  4. Why don’t the Government start charging for garbage collection? I could not understand why they stopped it in the first place. If some people couldn’t afford it, then write it off but the majority of the population can afford it and should be paying. I am willing to pay at least 25 a month. 100 a year is way too low. It could be billed monthly and included on the Water Authority bill for those connected to save costs.