The Cayman Islands government earned $16.3 million more than it expected during the first three months of 2018, but it also recorded a surprising drop in immigration-related tax revenues.
The figures are contained in government’s unaudited quarterly financial report, the first one produced by government for public review.
Despite what the government budget-crunchers considered “overall favorable results,” several earnings areas saw sharp drops during the quarter, particularly in immigration-related fees, where Cayman has been reporting near-record numbers.
Earlier this year, the Immigration Department recorded about 25,800 active work permits and government contracts held by non-Caymanian employees. Such a high number of foreign workers has not been seen here for a decade.
However, the January-March 2018 financial report stated work permit fees paid to government were $1.2 million lower than expected because of refunds paid to companies that canceled those permits.
The annual fees paid by permanent residents, of which there are more than 5,000 in the islands now, also fell off by an additional $1.7 million.
The Finance Ministry’s explanation for this was: “Annual permanent resident fees were lower due to the change in classes of permits being applied for at a lesser fee.”
There was also some decline in fees paid to government for those registering exempt companies in the islands. Government received about $3.5 million less than it expected during the first three months of the budget year.
However, that decline was more than offset by greater-than-forecast revenue increases in bank and trust license fees, and license fees for mutual fund administrators.
Earnings from stamp duty on property sales soared, going $6.8 million over what was initially budgeted.
“Stamp duty on land transfers was higher due to higher volumes of property transactions coupled with increasing property values,” the Finance Ministry report stated. “This trend will likely continue through the end of 2018.”
The government also collected $2.3 million more than expected from tourist accommodation licenses during the first quarter, likely a result of hurricanes causing extensive damage last year to competing islands in the eastern Caribbean Sea.
“Tourist accommodation charges were favorable due to all-time high arrivals,” the report noted.
On the expenses side, government’s personnel costs came in about $4.7 million lower than expected for the quarter, largely because of a lag in hiring.
“Several ministries and portfolios [have] vacant posts that have not yet been filled, including positions for the fire service, prison, public lands commission and schools,” the Finance Ministry noted.
Typically, Cayman’s government earns most of its tax revenues for the year during the early months, when most financial services-related fees are paid and tourism is at its high point.
Finance managers warned that further monitoring would be needed over the course of the budget year to ensure Cayman stays afloat in the leaner months.
“As ministries anticipate less delays in recruitments and delayed projects begin to come online during the remainder of the year, early savings experienced in expenses will not likely hold true for the remaining three quarters of 2018,” the report noted.