Living in paradise can be pricey

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. 

 

Small, isolated  

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. 

 

Candidates speak  

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. 

 

Cutting costs  

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. 

0
0

8 COMMENTS

  1. Until I hear any government official entertaining the thought of mini nukes. To compete directly with CUC. It’s all just talk, and rhetoric.

    Pandering to the people. Tell em what you think they want to hear.

    The biggest cost isn’t taxes. It’s not food, it’s not this or that. The biggest bill you pay to date. Is electricity.

    So unless you live with no air conditioning. Shut off your hot water tank. And it is still around 200 dollars a month for regular lights, fridge and tv or two and a computer or two.

    That is your biggest expense on the island. People regularly pay 400 to 600 or more for a comfortable home environment. Do we really believe it’s the 30 cents they put on gas per gallon. When if you do the math, you may buy a 100 gallons of gas a month, which is 30 dollars a month of taxes.

    Or food. Which i find is pricey but if you shop smart. Is very doable.

    If politicians started treating electricity with the same rhetoric as education. Everyone deserves a good education. And everyone deserves affordable electricity.

    Until they start looking at mini nukes which would cost us 12 to 14 cents a kilowatt hour. Compared to CUC’s 30 some cents, then up to 75 cents if you go past a certain limit.

    Then the talk of keeping the cost of living down, by politicians. Is exactly what it is. Talk. Pandering to the people. Tell em what they want to hear.

    0

    0
  2. @Big berd – Where did you get the idea that the tax on diesel (electricity is powered by diesel, not gas) is only 30 cents per gallon? It is 85 cents, and anyone can see exactly how much they pay in taxes simply by looking at their CUC bill which is itemised.

    0

    0
  3. Any candidate saying which fees or taxes they would cut is talking moonshine, unless they identify what corresponding cuts in spending they would make.

    Cayman’s economy is being slowly choked by ever increasing government demands, and the knock on effects on cost of living are there for everyone to see. The most urgent problem facing Cayman remains what it has been for the last several years, the need to make radical cuts in government spending. That can’t happen unless you are prepared to face meaningful reductions in civil service head count. There are ways this could be done, by for example enforcing retirement age, but oddly enough i have yet to hear a single candidate make any proposal for a real terms cut in spending generally or the civil service specifically.

    In the absence of any such commitment, a candidate who says he will cut this fee or that tax is lying, plain and simple.

    0

    0
  4. JTB’s comment is spot on. Our living-costs are directly attributable to our bloated public-service expense. I have been grumbling about this for years now, first in my newspaper columns and latterly on my blog (Barlow’s Cayman). The waste, the extravagance, the corruption – those all don’t come for free, you know.

    Last month I posted an item called How to balance a budget, about zero-based budgeting. I doubt if any candidate will be brave enough to actually push for such a thing, but they would if they seriously wanted to cut Public Expenditure.

    0

    0
  5. I have spent 8 years studying the price of goods in the states versus Cayman and truthfully the retailers in Cayman are Not ripping everyone off.
    It would be easy for me to ship in any product Lumber, Cars, Dry Goods, Clothing etc I went thru all of them.
    I cannot do it because the mark up just isn’t there.
    The current retailers are aware of people like me trying to figure out what to bring in and thus don’t mark goods up very high. Yes select items are overpriced but the retailers have huge bills to pay
    and the cost of doing business in Cayman is out of control.
    That said if I did attempt to enter the market I would be beat down quickly and most likely be sent packing by bad minded people.
    I would also like to add that the establishment has made it so that the locals that wish to do better cant because of the way the system is set up. For example If my friend wanted to open up a small painting company he couldn’t because,
    two work permits would cost 5000 Paid up front and perhaps the permits wont even be granted.
    Plus a TB 300 which may not be granted.
    Plus health insurance 235 right away
    Plus supplies to start 1000
    plus an old truck 3000
    and it keeps going before he even has his first contract.
    Thus unless my friend has a bunch of money or begs me he cant go into business and must continue working for the man. This is the way the system is. They say they are protecting Caymanians. I say they are killing them.

    0

    0
  6. Speaker Big Berd…
    I am almost certain that there are no taxes paid on the Diesel that CUC uses.
    And let everyone not forget… CUC is a publicly traded company. Their JOB IS TO MAKE AS MUCH MONEY AS POSSIBLE!

    0

    0
  7. There is a fear of cutting government jobs, but if the savings are used to reduce the burden on the Small and Medium business the result would be a healthier economy and the jobs created would outweigh those lost.

    There also has to be a move away from giving the big businesses all the breaks – give a big business a 10 million tax break and you won’t create as many jobs as giving a 1000 small businesses a 10,000 tax break…

    SME’s (the Small and Medium sized Enterprises) typically make up 80 percent of the economic wealth of a country, yet Cayman seems to focus on the benefitting the remaining 20 percent.

    0

    0

Comments are closed.