The Chamber of Commerce has called on the Ministry for Financial Services to make every effort to reduce or eliminate some of the government fee increases introduced last year, particularly in areas where fees imposed by the Cayman Islands government are higher than those in other jurisdictions.
International clients are sensitive to fee increases and are comparing fees across competing jurisdictions, while the costs of services are becoming a central determining factor when selecting an international business center, the chamber said in response to the government consultation of the private sector on the impact of the 2012 fee increases.
“Our members have indicated that the revenue measures introduced in recent years in some sectors of the financial services industry are now placing Cayman in a competitive disadvantage and we support a reduction in fees in areas where our prices have eclipsed our main competitors,” Chamber President Chris Duggan wrote in a letter sent to the ministry on Aug. 15.
In the letter, accompanied by an eight-page report comparing local and international fees in various industries, Mr. Duggan reaffirmed that the local chamber opposes the introduction of any new revenue measures that may hinder economic growth and job creation.
The submission by the Chamber of Commerce analyzed the impact of 17 fee increases, ranging from bank and trust licenses, to master fund registration fees and a stamp duty on property insurance premiums, comparing it to the level of equivalent fees in competing jurisdictions.
The chamber’s response to the consultation, launched on July 16, was based on an online survey of its membership, as well as submissions from the Cayman Islands Law Society and the Insurance Managers Association of Cayman, which the chamber endorses.
The membership survey revealed that the overall cost of doing business, especially work permit and government fees, is becoming a major concern for the private sector.
Because government had not done enough to rationalize the public sector and reduce spending, new fees and revenue measures are often introduced unpredictably on short notice. The financial services sector in particular has become the main source for additional revenue and also the sector most impacted by the fee increases, the chamber said.
Some of these financial services providers are also “questioning the value for money proposition for some of the services that are being provided to industry by government,” the chamber wrote.
The chamber recommended that the ministry consults with the financial industry sectors to develop a five-year strategic plan. The various fee reviews should be carried out periodically; for example, every four years, as frequent changes create additional administrative work and client dissatisfaction, the chamber report maintained.
“Government and industry can work together to develop new products and services and to retain and attract new physical business to our shores that will create employment and business opportunities for Caymanians and legal residents over the medium to long term,” Mr. Duggan said.
A chamber survey had previously identified the rationalization of the public sector, the cost of doing business and the high cost of living among the top issues for the new government.
“The chamber supports the findings of the Miller Shaw report and we repeat our willingness to work in partnership with government to implement strategies that will produce long-lasting savings to the national budget, a reduction of the national debt and fees charged to businesses,” Mr. Duggan wrote.
In 2012, the previous government had excluded the Chamber of Commerce from a consultation on the fee increases.
“This may have been because the Chamber of Commerce has opposed attempts by government to introduce new revenue measures rather than first rationalizing the public sector and controlling spending, especially in light of the global economic recession,” Mr. Duggan said.