Archive for August 30th, 2009
Ridley proposes property tax
(CNS): In response from demands from the UK, Tim Ridley, the former chair of the Cayman Islands Monetary Authority and a founding partner of one of Cayman’s most successful offshore law firms, has made a strong argument for the introduction of property tax across the islands. A levy of just 0.25%, which would have a relatively low impact on the taxpayer, Ridley said, could add as much as $50 million a year to government coffers. He noted that it was the sort of local tax, or “community service charge” as he called it, that people who own property are accustomed to paying.
Speaking at the Ritz meeting on Thursday, where Leader of Government Business McKeeva Bush told an audience of private sector stakeholders and civil servants that Cayman needed to present a plan to the UK demonstrating new ways of generating sustainable income for the treasury, Ridley said the UK had sent a clear message that Cayman needed to adopta permanent revenue solution.
After Bush shared a letter from the new Overseas Territories Minister, Christ Bryant, with the audience, (see UK tells Cayman to levy taxes) Ridley said, “The worrying message in that letter is long term sustainable revenue. There are very limited options to what might be palatable here.” Dismissing income tax and sales tax, he added, “One area I do think we are going to have to look at is property tax.”
Ridley went on to explain that packaged as a community service charge, if it was fair and equitable and levied on an annual basis it would represent a commitment from the Cayman government that the UK should find attractive. He noted that, given what the UK was saying about the islands’ over dependence on the financial services sector, the government needed to find ways of funding its operating budget that placed a fair burden on the community.
Ridley said he had advocated for a property tax in the past, and while he was well aware that it would make him few friends in the real estate business, it could make government a lot of money. He estimated that there was anything from $10-17 billion of real estate across the three islands and that just ¼ percent rate could raise a consist $50 million. He said that even allowing for concession on low value properties and people unable to pay, it was significant and in line with OECD recommendations that property taxes should trigger around 8-12 % of government’s annual revenue.
“Those of you with ½ million dollar properties would only pay $1,250 per annum, likewise $3 million $7,500 per annum,” he added, arguing that to say that would be unattractive to foreign investors was unrealistic given the kind of service and strata fees they pay to private sector management companies and resorts.
Ridley said people who own property overseas are used to paying local tax charges. He said in many areas local governments send bills with a breakdown of where the service charge goes, such as emergency services, police and garbage management. Ridley suggested an incentive was to combine the charge with a long term reduction of stamp duty, as any losses would be offset by the advent of a sustainable annual income. “This is what the UK is asking for,” he said. “The UK is saying, you cannot continue to exist on one-off up front transaction fees that are dependent on an ever decreasing economy.”
Bush noted that Ridley’s suggestion received loud applause, but when he asked if the audience would support a property tax he said it was less convincing. Bush told CNS after the meeting that for him, any kind of new tax would be a last resort and he would want to see wide support for it before considering such a levy.
The real estate sector has already raised objections, and James Bovell of Remax noted that there could be considerable ramifications and hoped the LoGB would consult with the Cayman Islands Real Estate Brokers Association before making any decisions. He warned that the industry was down and that the potential loss of investment had to be considered, as well as the accepted fact that once a new fee or tax is imposed it’s very easy for successive governments to keep increasing it.
Following the meeting, JC Calhoun of Coldwell Baker also voiced his opinion in an email sent to stakeholders and noted that Caymanian families maynot be able to afford to continue to hold onto their heritage if they had to pay tax on property. He said it would also be an added expense for those leasing property, making rents higher and more difficult to get a positive return. He said foreign investors have been OK with the stamp duty because after several years it’s better than holding property somewhere with an annual property tax. “Foreigners who currently buy and hold land inject money into our system, and take nothing. They rarely use our schools or hospitals,” he added.
Calhoun also argued that in order to sell a property as an investment, it would need to generate even more income to cover the property tax. “Right now, with most of the world’s investors skittish and being very careful with their money, rental and lease rates are falling,” he said. “What you would gain by property tax, you will probably lose in stamp duty.” He also said the rate would inevitably be raised. “When that happens, there will be so many people scrambling to getout of property that the values will drop dramatically,” he said.
Noting the profession’s reaction, Ridley told CNS that no one likes additional taxes but the Cayman Islands has probably maxed out the traditional ways of paying for the government services people expect and alternatives such as income tax, sales tax, salary tax were less appropriate and more difficult to implement and that people should not be dismissing the community service charge.
“Those who immediately push back on the suggestion of the community service charge should consider the matter carefully and separate out their own narrow short term interests from the greater long term good of these Islands,” Ridley said. “It can be a win-win for all.”
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Video: What is aquaponics?
(Organic Nation): Aquaponics is a relatively new approach to food production that utilizes the symbiotic cultivation of plants and aquatic animals in a recirculating environment. The beauty of aquaponics is that it offers a solution to a major issue in raising fish: what to do with fish waste. Instead of polluting the surrounding area with tons of raw sewage, the waste becomes a beneficial fertilizer for plants. Myles Harston of AquaRanch Industries has been working with aquaponics 1992. He grows tilapia and a wide variety of certified organic vegetables including lettuce, kale, herbs, tomatoes, and hot peppers.
Tempura lawyer admits error
(CNS): The legal advisor to the Special Police Investigation Team (SPIT) of Operation Tempura has been hauled before the UK Bar Standards Board and admitted fundamental errors regarding the advice he gave to SPIT. The senior investigating officer, Martin Bridger, had used the advice given by Polaine to arrest Justice Alex Henderson, which resulted in a damages award to the judge of $1.275 million after Sir Peter Creswell ruled the arrest was unlawful, paid by the cash strapped Cayman treasury.
Polaine has sent a letter of apology to the Grand Court Judge and now awaits the decision of the UK bar regarding his future as a lawyer.
Polaine was hauled before the board as a result of complaints made by Justice Henderson about the advice and conduct of Polaine over the course of Operation Tempura as well as the UK lawyer’s statements made to the press following the judge’s exoneration by Cresswell. Justice Henderson claimed Polaine should have known that his advise to arrest him was wrong, that he had made deliberate misrepresentations to a Justice of the Peace (Carson Ebanks, who had signed the warrants), had placed himself in contempt of the court by continuing to advance his views in the press in opposition to a Judgement of the Court, and caused damage to Henderson’s reputation in the Cayman Islands and abroad.
According to parts of the hearing before the board released by the Chief Justice’s office, Polaine admitted that there was insufficient evidence to justify a “reasonable suspicion” that Justice Henderson had committed any offence whatsoever.
“I gave my advice in good faith, but have to concede, in the light of that ruling, that my judgement has been shown to be poor and that I was incompetent in the advice I gave,” Polaine stated. “I recognise that my erroneous advice has had a profound effect on Justice Henderson, his family, and the Cayman Islands as a whole. I apologise unreservedly. I also accept that my poor standard of professional conduct in this regard has had a detrimental effect on the reputation of the Bar of England & Wales in the Cayman Islands. Again, I offer my sincere apologies.”
Polaine reportedly admitted to failing in his professional duty to make full disclosure to the JP including the previous ruling of Chief Justice Anthony Smellie in resonse to an application by SPIT to search the home of former police commissioner, Stuart Kernohan, which had been refused. The lawyer said that he had formed the view that the earlier ruling by the chief justice was not relevant or of any assistance to the JP but went on to concede that his judgement in that regard was poor. “I apologise to the JP and to Justice Henderson and his family. I accept that my advice in this regard was, once again, wrong, but it was made honestly.”
Polaine admitted that hebeen not called to the Cayman Bar so should have confined his advice to matters of English Law. “I recognise, however, that on that occasion, I have gone beyond this and have advised and commented upon Cayman Law and procedure,” he stated. “I was introduced to the JP as a lawyer …. in retrospect, I should have explained that I was not qualified in the Cayman Islands. I accept that my omission to do so created a misleading impression.”
On the matter of the work permit, he said that he had been advised that he did not require one as he was contracted to the Cayman Islands government. He said he was not engaged by the attorney general and was not a prosecuting attorney but an advisor.
Polaine said he accepted “unequivocally, on the basis of Sir Peter Cresswell’s ruling that there were not grounds for such suspicion of misconduct, and if he had inadvertently given the impression when he spoke to the press after the incident, he was sorry.
He added that his intention was in the interest of giving the Cayman public an explanation. However, Justice Henderson had told the board that a fair reading of all of Polaine’s press comments would satisfy an objective reader that he was asserting the correctness of his flawed advice for his own reasons and not in the public interest.
Polaine conceded that he should not have spoken to the press and that he had risked the reputation of the Bar of England & Wales. “I recognise that, as Sir Peter Cresswell’s ruling shows, I have been found wanting in many aspects of this matter. I reiterate my heartfelt apologies to all those who have been adversely affected,” Polaine said.
In his letter of apology to the judge, Polaine apologises for the “upheaval and distress” and admits “fundamental and far-reaching errors.” The UK lawyer says he failed the investigators, the government and the people of the Cayman Islands and, above all, the judge."
"I sought to carry out my responsibilities to the best of my abilities, but succeeded only in demonstrating poor judgment and flawed thinking. I deeply regret my failures in the above regard and, again, wish to express my unreserved apologies,” Polaine writes.
The UK board will be offering its decision on Polaine in the next 12 months, the CJ’s office stated in a release.
Justice Smellie also noted that the apology confirms that the “foray by Operation Tempura into the Judiciary was ill-advised and misconceived from start to finish.” Smellie said that included Bridger’s criticisms of the release of his own judgement in response to the request for a search warrant in the related case.
“This unfortunate chain of events is now a matter behind the country and behind the Judiciary, which will continue to maintain the very high standards to which the islands are accustomed,” Smellie added.