Stamp and customs duty cut to boost economy

| 23/03/2009

(CNS):  Continuing the legislative sprint to the finish, the members of the Legislative Assembly passed another five pieces of legislation on Friday including amendments to the Customs Tariff and the Stamp Duty bills in a bid to boost development and the real estate industry. Duty on construction materials is to be reduced by 5% and stamp duty is being cut across the island by as much as 2.5% for buyers in the Seven Mile Beach area and 1% elsewhere.

The customs duty reduction will stay in place until January 2010 and the stamp duty window will last only until 1 October 2009. The explanation for the short window of opportunity was, government said, to ensure the flurry of activity associated with stamp duty reductions, which is normally concentrated towards the end of the period, would make an impact on Cayman’s economy sooner rather than later.

Described by Financial Secretary Kenneth Jefferson, who laid the two pieces of legislation on the table, as a package to stimulate the economy, the opposition criticised the moves as too little too late insisting that there was no evidence that such moves would do anything at all to help the people in Cayman who are actually suffering more than ever before.

“People can’t eat cement,” Second Elected Member for West Bay Rolstin Anglin noted with irony. “The economy is in really, really bad shape. We have people coming to us for help that we would never have dreamed would find themselves in such a position. These people don’t even know where the social service department is as they have never needed help ever before.” He said a bill to stimulate real estate would not address the problem. “Does the government believe people are just going to suddenly jump up and build, that we have lots of rich people, rich Caymanians, just sitting around waiting for a break in duty to start building?”

Anglin said that if government had come with a more comprehensive list of duty reductions on things the people actually buy it would at least be something people could understand, but reductions in stamp duty and construction materials were too little too late given the fact that duty was the least of the reasons why so many developers had decided not to build or invest in Cayman. He said the bills were a desperate last attempt to address the government’s long term mismanagement of the economy and gain votes.

The government, however, argued that the 5% reductions on most building materials and significant reductions on stamp duty would stimulate some investment, especially as it was combined with a commitment by the real estate sector to cut commissions industry wide by around 20%.

“We are not suggesting it is a magic bullet. We believe this, together with a reduction in real estate commissions, will have the effect of stimulating real estate development and activity,” said Minister Alden McLaughlin, adding that boosting development was important given how many Caymanians were employed in the construction industry. He explained that this at least was a way of creating new jobs to replace many that would likely be lost in the coming months as major projects finish and few new ones were yet on the horizon.

The government also pushed through three other pieces of legislation, two of which were important changes for the offshore industry.  Amendments to the Companies Law to regulate mergers and the Exempted Limited Partnership Law to regulate wind-ups and dissolutions have been long anticipated by the offshore industry as the changes will offer the industry a much needed opportunity to attract more work to the jurisdiction.

The bills received support from both sides of the House but not before they provided the opposition with another opportunity to criticise the government for the delays in bringing such crucial amendments before the Assembly. The government had stated that the delays were due to a shortage of specialist staff in the legal drafting department.

“Given the contribution that financial services makes to the economy and government revenue one would think that whatever resources are necessary would be allocated to ensure that these bills could be completed in order to avoid missing commercial opportunities,” Anglin said, adding that given the impressive amount of legislation that had suddenly come through the House in the last few weeks, the drafting problems must have been resolved. McLaughlin once again responded to the charges on behalf of government and said despite the inference that government was rushing things through only because of the election, the world would not end on 20 May.

During the day’s debate the members engaged in a number of heated exchanges where Madame Speaker was forced to intervene as the insults flew and voices were raised. Referring to the members as “children” on at least one occasion, the pressure of time was apparent as the day wore on. She tried in vain to make members stay within the parameters of the laws for the debates and not wander into unrelated areas, which caused not only further argument and tit-for-tat on both sides of the floor but absorbed precious time, threatening to upset the government’s tight timeline.

The fifth bill passed on Friday before the evening’s Finance Committee sitting was an amendment to the Public Management and Finance Law to protect the privacy of patient medical records held by the HSA from financial audits.

The Legislative Assembly will meet for one more day of business on Monday, 23 March, before parliament is dissolved in an official ceremony on Tuesday, 24 March, in preparation for the 20 May General Elections.

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Comments (8)

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  1. Kerry Horek says:

    I am most dissappointed to say the least that our Government would pass a bill to assist the rich with purchasing our seven mile beach land.

    I am against any reduction on stamp duty on seven mile beach in favour of the rich to purchase properties here.  The only people that can afford to buy seven mile beach is the rich and our Government gives them a tax break!  Incredible the rich gets richer at the expense of the hard sweat of the hard working Caymanian people while their precious seven mile beach properties are segregated from from and the Government hands a refund cheque to the rich on the stamp duty – this stamp duty is our money!!!! Why is it that our Governments must keep giving these hand outs.

    I am so sorry that the average Caymanian can’t own a piece of Seven Mile Beach. 

    I have publicly supportedthe PPM, but I am very dissppointed about this move.  I am not in support of this decision rushed to pass in the house  and obviously with very little thought going in.

    What is worse lets see what difference this is going to make.  I am saying publicly that this is not going to make a difference in the real estate market.

    Sadly, I am sure our Government listened to the nonsense fed to them by a few selected realtors in the market whose only interest is to see themselves survive and couldn’t  care less if their fellow Caymanian gained by this. 

    The rich get 2% discount to purchase seven mile and the rest of the peasants only get a 1% discount.  Absolute rubbish.

    I support all Caymanians owning a piece of their country and getting tax concessions but certainly I do not support  the rich and powerful getting tax breaks as these individuals can afford to pay tthe stamp duty rates regardless of what rates are charged.

    I remain Kerry Horek a native Caymanian Realtor!!!!

  2. Anonymous says:

    Interesting that they manged to pass the stamp duty reductions, no laws or amendments that will actually help Caymanians economic situation and failed to pass the Conservation Bill despite CIREBA (Cayman Islands Real Estate Brokers Associations) (embrassasingly) getting thier campaign against the Conservation Bill all wrong.

     

    I guess the campaign was not in the end neccessary.  Gentlemen’s agreements often do the trick.

     

    Very very very disappointing PPM. 

     

     

     

  3. Caymanluvr says:

    This is unbelievable!  I cannot believe people are not screaming at the top of their lungs!  Wake up Cayman! 

    Pass a law that says that NO NEW LAWS may be passed 3 months before an election.

    Pass a law that says STOP putting money into the hands of developers and real estate agents an into the hands of the people. 

    This is terrible.

    Why isn’t there a news outlet in Cayman that updates us about laws that "are to be passed" instead of laws that HAVE been passed????? 

    This is huge and the papers MISSED IT.  Too little too late. 

     

  4. Anonymous says:

    Can anyone please confirm when these reductions in stamp duty and real estate commission fees are scheduled to take effect??

    I plan  to purchase property to build right now and am willing to wait until these regs are implemented

  5. Anonymous says:

    This is sick. Are construction costs now going to drop with 5% ??
    I don’t think so. Contractors will simply make 5% more profit.
    SevenMileBeach need stimulus ? There are no caymanians on SevenMileBeach.
    What about EastEnd, NorthSide, FrankSound etc etc……

    It is clear AGAIN: Politicians are controlled by local companies.

    And I promise you, they will be voted back in. Because we Caymanians are stupid.

  6. Anonymous says:

     Did I read that article correctly that the MLA’s are going to reduce their salary by 20%.

     

    What a great idea and I applaud them in these difficult times.

     

    Wow – what a surprise – never thought  they would be so generous.

  7. Hungry Voter says:

    “People cannot eat Cement”

    I first must say that I am not a UDP supporter however this comment by Rolston is absolutely correct.

    This shows that the PPM Government is way off track and lost in the wilderness. The folks with money are not spending any money waiting to see what is going to happen with the world economy-no matter what the stamp duty is. The rest of us, the majority, are struggling to pay the bills, hold on to our jobs and are still getting behind everyday.

    These types of stimuli only work when you have normal economic situation. In these times, we need thinkers in the LA.

  8. Anonymous says:

    Again all MLA’s are in the pocket of the real estate industry to assist foreign people buying up more Caymanian owned land. 

    Which candidate is brave to speak out about the real estate industry and what it has done to Cayman to push infrastructure expenses on us the people, while they make the big $$$. Get balance into development costs.

    Cayman is addicted to the drug development, the more we get the more we want, the more it costs all of us residents to subsidise the cost to build roads, schools, police stations, fire stations, at the expense of the residents while the super rich Caymanians and foreigners take their money away.

    Save Cayman for Caymanians.

     Yes discriminate, take care of our own first!