It’s no secret that the Cayman Islands are among the most expensive places to live. As to why, that’s no mystery either.
Cayman’s high cost of living is a result of its high standard of living, combined with the realities of a small population, isolated geography and significant government fees.
The small population means local consumers don’t enjoy the benefits of economies of scale – as goods are purchased and supplied in relatively small amounts (compared to, say, a metropolitan area of 1 million people). Cayman’s small size, lack of natural resources and isolation has prevented the country from developing a meaningful manufacturing sector – forestalling possible cost savings associated with local products.
While Cayman’s wide expanses of blue water please the eyes of residents and tourists, it also means that all goods must be flown in by plane or shipped in by boat. That dramatically increases the price of goods here compared to the prices they would be able to command at their points of origin, due to added costs for transportation, such as fuel.
Similarly, while Cayman’s lack of income or property taxes is attractive to foreigners and expatriates, that also means that government must subsist on fees such as import and fuel duty. Work permit fees also increase the costs for businesses, who in turn pass along those expenses to consumers.
As Cayman residents have grown accustomed to first-world luxuries such as cell phones, air conditioning and fancy automobiles, and continue to demand fresh produce and finished goods, it seems economically inevitable that the cost of living will remain high, and probably be pushed higher due to global factors such as energy and food prices.
Several candidates are sounding off on how they would try to manage the cost of living for Cayman residents if elected to office in May.
People’s Progressive Movement candidate Alva Suckoo of Bodden Town said, “The cost of living is directly linked to the tax increases, as well as some external factors.
“We’ve seen the policy whereby every time we want a balanced budget, we increase fees. We need to reduce fees. I’ve seen examples where large organisations here have actually had to reduce the size of their workforce in order to save some money in their operating expenses. As they’ve reduced the size of their workforce to make some savings, the government has increased the fees that they pay to the point where they’re actually paying more.
“When we look at the loss of one employee from one of those firms, especially in the accounting and legal industry, the loss of a lawyer has a severe effect on the economy. If a lawyer leaves Cayman… they’re not shopping in the local supermarkets or eating in the restaurants. We’ve seen a huge reduction in inward investment and money in circulation.”
PPM candidate Wayne Panton of Bodden Town said, “We’ve had fee increases, we’ve had duty increases on fuel… all of these things tend to be inflationary as they pass on to small businesses…. We’ve got to identify the most egregious of the fees increases, we have to identify the ones that are most impactful in terms of cost of living… We have got to find efficiencies in government”.
Independent candidate Matthew Leslie of George Town said, “We seem to have an issue here with government that when we need to look for money we automatically hit private businesses, the finance sector – we drive fees up because we believe that they have a never-ending wallet.”
Mr. Leslie said he would look at reducing fees for business registrations and yearly renewals, as well as some immigration fees.
Independent candidate Roy McTaggart of George Town said, “If we ever want to have any chance of rolling back some of the fees and some of the taxes that governments have imposed upon us, the only way we can do it right now is by cutting expenditures. That is the only side of the equation that remains to give us any flexibility and hope to accomplish this, simply because there is no room to raise revenues any further, and there is no room for us to borrow given the current restraints and restrictions placed upon this country by the Foreign and Commonwealth Office.
“Therefore we must address it by cutting expenditures, and let’s face it, this government, this next government, they have to address it and face it square on and deal with it once and for all.”
He said, “In terms of looking at rolling back any taxes, you have to look at what is going to give you the biggest bang and have the most effect on the economy and put the most money back into people’s pockets. One that comes to my mind is the gasoline taxes.”
He said, “Reduce those and that affects every single person in this country. When you talk about immigration fees, that only affects those who have work permits. That tends to be the business community but things like gas taxes affect every single person. Import duties may be one that we could look at rolling back [by the] 2 per cent we increased in 2009.”
Independent candidate Gregg Anderson of Bodden Town said he would push for a Competition Law that would prevent monopolies. He said, “Monopolies drive up the cost of living and should not be allowed to stifle competition,” he said.
“Another proposal for a reduction in the cost of living involves the development of a comprehensive energy policy that makes extensive use of renewal energy resources to reduce the cost of electricity to consumers. The price of fossil fuel is a significant component of our electricity bill, therefore reducing its use will yield savings for all,” he said.