Cayman Islands Opposition Leader McKeeva Bush has exchanged barbs with Financial Services Minister Wayne Panton, telling the Legislative Assembly that tax-exchange information agreements with US and UK authorities threaten Cayman’s financial services industry.
Speaking as part of the budget debate on Wednesday morning, Mr. Bush warned of “skulduggery” in People’s Progressive Movement party interim accounts, but cautioned the legislature on the larger issue of the US Foreign Account Tax Compliance Act and its British equivalent.
“With these new multilateral agreements the government has just reached, we have signed away the backbone and the lifeblood of the financial services industry,” Mr. Bush said, alluding to late-stage negotiations with the US Internal Revenue Service, the April G-5 Pilot Agreement and the June OECD Convention on Mutual Administrative Assistance on Tax Matters, all committing the Cayman Islands to automatic exchange of tax information, ultimately enabling global tax collection.
Previously, he said, the local regulatory regime had preserved “the economic wealth and reputation of the Cayman Islands. It protected the Cayman Islands”.
Recent multilateral understandings, however, threatened that, he said, particularly in light of Washington’s PRISM scandal in which the US National Security Agency had been compromised.
“PRISM information is sent to third countries to be leaked and hacked,” Mr. Bush said. “The Cayman Islands has agreements with 30 countries and should not agree to the wholesale release of information until the G-20 agrees to the release of all data to each other. Otherwise, it will irrevocably damage the Cayman Islands.
“We are being used as an experiment, and we should not enter this type of agreement, and certainly not lead the way,” he said, referring to Cayman as the first UK overseas territory to accede to British tax information sharing demands.
“Where is the level playing field? It is short-sighted and destructive,” he said.
Mr. Bush worried US and UK exchange agreements violated human rights and the privacy of citizens, who “had brought businesses and families here, and made us the country we are today.
“We have been compliant in everything they [US and UK authorities] have asked us to do. They say they are going to revise the plan, but the [UK’s Foreign and Commonwealth Office] always wants more.
“You are going to see serious devastation here if we sign this. This could kill Cayman’s financial services industry. Businesses will go elsewhere,” Mr. Bush said.
In a lengthy rebuttal, however, Mr. Panton, speaking only 24 hours prior to his appearance at a local industry-wide FATCA seminar, rejected most of Mr. Bush’s fears, saying Cayman had been part of information exchange agreements for years, and the latest accords “had the support of the financial services industry”.
“Our interest was to promote the creation of a single standard in which all jurisdictions participate,” he said, encouraging “a level playing field, and avoiding costs and multiple competing standards.”
Efforts to align FATCA, G-5 commitments and OECD agreements were ongoing, and in “extensive consultation” with industry representative Cayman Finance.
“We have expressed reservations,” Mr. Panton said, with most of the information-exchange proposals, observing that negotiations continued.
However, naming Bermuda, Jersey, Guernsey and the Isle of Man, the minister said all British overseas territories and crown dependencies “have made commitments” to both the G-5 agenda and the Europe-wide Convention on Mutual Administrative Assistance on Tax Matters.
“Our policy is to engage with the private sector on these issues because it is imperative that we understand,” he said, telling Mr. Bush’s that his fears “do not reflect the view of the vast majority of those involved”.