Collecting our thoughts on government fees

Our government’s most serious and well-documented flaw is how it spends money. Coming in at a close second is how it collects money.

A new report from the Office of the Auditor General — one of the parting salvos submitted to Cabinet in the final days of Alastair Swarbrick’s tenure — highlights, as the Compass noted Friday, “inefficiencies, complicated fee structures, and a lack of risk management and performance tracking” in regard to government’s revenue collection apparatus.

The good news according to the auditor general is that overall the government is collecting the revenues it’s supposed to. (We guess that qualifies as good news.)

Potential troubles arise when the government doesn’t collect the revenue it’s due, in the form of fee waivers. Acting Auditor General Garnet Harrison said, “It was unclear in many cases why the waivers were granted.

“Government doesn’t track how much it grants in waivers, leaving it unable to provide proper financial reports required by its own accounting policies.”

Generally speaking, fee waivers amounting to less than $25,000 have been at the discretion of the financial secretary, and more than $25,000 goes to Cabinet for approval. A new amendment to the Public Management and Finance Law provides at least a partial fix to that problem, by taking the responsibility for waivers out of the hands of the financial secretary and placing it with the Ministry of Finance.

Strictly speaking, it may seem more appropriate to place that discretionary power in the hands of a minister, rather than a civil servant. However, we would point out that the “real” solution would be to have an equitable and obvious system of taxation that would make the exercise of that discretion a relatively rare occurrence.

“Fair and transparent” taxation goes hand-in-hand with “simplified” taxation. Take, for example, work permit fees. Ponder the following sentence from Friday’s story: “There are more than 5,000 different fees listed for work permits in the Cayman Islands.”

Considering there are roughly 20,000 work permit holders in Cayman, that means (if evenly distributed) there would be merely four people for each kind of work permit category. The reality is that there are very many categories that do not even have a single work permit holder. What we have here is bureaucratic bloat and unnecessary complexity. Clearly there are too many work permit categories — which, as employers and human resource professionals know, are convoluted, confusing and whose fees vary subjectively, and oftentimes significantly, according to job titles, industry classifications and geography (whether it’s on Grand, Brac or Little).

It is no stretch to declare (categorically, perhaps) that the Byzantine classification of work permits is the number one impediment to promoting valued workers in Cayman. Promoting a work permit holder from “sales representative,” to “sales manager,” for example, not only requires an increase in that person’s salary, and perhaps benefits, but the changing of that person’s job title gives rise to a governmental checklist involving the re-advertisement of the job and an increase in the relevant work permit fee — in this case, typically from $1,000 per year to $8,000 per year (but that, of course, varies by industry and location).

What ends up happening often is an increase in duties and pay, but no change in title. It is too common in Cayman for people’s job titles to be designated according to work permit regulations, rather than actual responsibilities.

Government auditors point out that reducing the number of work permit categories and fees would simplify and speed up the process, and “thus improve service to the public.”
Simple, speedy and service-oriented. Come to think of it, that’s not a bad mantra for the entire civil service to adopt.