Distasteful as it is to anticipate yet another journalistic hatchet job on the Cayman Islands, the prospect nevertheless becomes a compelling watch for Cayman residents. Was last week’s dread of BBC’s “Britain’s Trillion Pound Island – Inside Cayman” warranted?
If someone is going to the trouble of producing a documentary about Cayman, it is understandably difficult for Cayman Islands representatives to turn down requests for interviews – they are damned if they do and damned if they don’t. Well aware that parts of their balanced view will end up on the cutting room floor, and eternally hopeful that they just might get an opportunity to dispel some misconceptions about the Cayman Islands, the governor, the premier and the CEO of Cayman Finance gamely, if nervously, agreed to be interviewed by Jacques Peretti. Other interviewees must similarly be aware of the risks, but hey it’s not every day you are offered an opportunity to showcase your seafaring dachshund or air your penchant for nudity on the BBC.
The outcome, while irritating in many respects, was relatively benign, but also curiously devoid of input from practitioners in the financial industry, who might have brought some enlightenment about the role that tax neutral, offshore financial centres play in international trade and its financial side, international capital flows, from investors to end-users. The global economy is complex and has its imperfections, as is the way the world does business. It cannot be simply explained in sand art. That does not make every aspect of it sinister. A basic understanding of, for example, the company management model (multiple, single purpose companies managed cost-efficiently by a small number of service providers), the regulations surrounding corporate groups that are listed on major stock exchanges (such as MANU.NYSE, TSCO.LON), controlled foreign corporation rules (that allow the tax authorities of the U.K. and the U.S., among other countries, to tax their corporate citizens on their worldwide income), and controlled and auditable transfer pricing rules (for setting the price of goods/services sold between related legal entities within a business enterprise), etc., could have made this documentary a lot more interesting and fair.
Cayman Finance’s recent campaign to educate people about the contribution of the finance industry to the Cayman Islands economy is admirable, and should perhaps be followed up by further education that will give residents the confidence to challenge misconceptions, whether in a BBC documentary or in everyday business and conversation. In addition to the areas listed above, here are some suggestions for the curriculum:
1) Distinction between secrecy and confidentiality; 2) Direct and indirect taxation; 3) The breadth and depth of Cayman laws and regulations; 4) The range of government revenue sources – tourism taxes, company registration and licensing fees, work permit fees, import taxes, etc.; 5) Import taxes versus shipping and handling costs; 6) Comparative import duties on consumer staples and luxury items; 7) Bank account opening requirements for non-residents; 8) British Overseas Dependent Territory status and Cayman’s relationship with the U.K.; 9) Tax Information Exchange Agreement treaties; 10) Alternative economic models to those adopted by the U.S. and the U.K. that can achieve the same or better objectives in countries with smaller populations without direct taxation (and the expensive infrastructure that tax collection requires).
Perhaps there is no harm in seeing Cayman through an outsider’s eyes from time to time. It highlights imperfections we know exist and clarifies that there are some that should worry us more than others.
Education should certainly be a major priority in Cayman. Enabling citizens to qualify for work in the better compensated jobs and professions is the most equitable and practical solution to minimizing poverty and crime. It is certainly more realistic than illegally freezing third parties’ assets and a la Robin Hood dividing the spoils among the populace. But rather than constantly despairing, reactively, to skewed journalism and conspiracy theories about where Cayman fits into the U.K. government’s ruination plans, let us do a better job of being proud of Cayman. Rather than protest that we don’t all drive Ferraris, fly in hairdressers, live in jaw-dropping homes next door to James Bond, and that neither do we all face eviction, lose sleep over the price of fish fingers, and not pay a penny in tax, can we not counter these negative portrayals more successfully by telling our own story. How wonderful it would be to watch instead on a Friday evening a documentary about, for example, Cayman’s heritage – ship building and the merchant marine, or Cayman’s contributions to the mother country in World Wars I and II and more recently the Falklands war, or Caymanians abroad today – artists, businessmen, scholarship students, or Cayman water sports and conservation, or Cayman entrepreneurs, or Cayman fishermen. Can we charge our Caymanian filmmakers with this challenge?
At home, we certainly must not downplay the many areas that need work and improvement, and we might also recognize that criticizing government does not achieve much, whereas civic responsibility by all citizens can be very powerful. But isn’t it time for Cayman to be less apologetic and more proactive in presenting to the world what a small nation can do to make itself self-sufficient, participate usefully in the global economy, live relatively peacefully, appreciate natural beauty, and recognize our good fortune to be living in this delightful part of the developed world.
Linda G. Haddleton