Chamber rejects tax but backs local assets sale

| 06/09/2009

(CNS): Cayman’s local business body has said it does not want to see the introduction of direct taxes as a way out of the country’s current economic crisis and backs plans by the current administration to sell government assets instead. The Cayman Islands Chamber of Commerce said this week that it had had an “extremely productive” meeting with government and hoped all efforts would be made to attract business through Cayman’s long successful system of indirect taxation without the need to introduce income or property taxes. 

The Chamber said that controlling expenditure and reducing debt formed part of the discussion as well as a need for an independent review of all government services, departments and statutory authorities. To reduce government debt, the chamber recommended identifying assets that can be sold outright or offered for investment through privatization or an initial public offering (IPO).

“By introducing this approach, local residents and businesses will be able to become direct shareholders of several important national assets and government would reduce its direct operational costs,” the Chamber said. 

It urged government to control costs, reduce the national debt and raise revenue from areas that would have minimal impact on business development and residents.  The Chamber proposed a number of possible new revenue sources including – — returning stamp duty on property to original rates of 6% and 7.5% effective 1st December; Introducing a national lottery; allowing Sunday Trading which will increase the collection of customs duties and will provide greater convenience for visitors and residents; introducing a fee on individual money transfers out of the country; legislation to access dormant accounts from retail banks; and reviewing miscellaneous fees and fines.

The Chamber said it had expressed its opposition to any additional revenue measures without a definitive plan to cut costs and reduce debt, any additional general corporate or any form of taxes on income, interbank transactions, payroll or property.  It also said it backed the development of cruise berthing and a mega yacht facility, relocation of the cargo facilities, medical tourism development, convention facilities, waterfront redevelopment in George Town and attracting the reinsurance sector and additional private trust business.

The pro-business body also said it wanted to work with government to develop investment policies that would create a red carpet approach to attracting new investment to the Islands and a revision of immigration policies.

The Leader of Government Business McKeeva Bush said that the Chamber represents hundreds of local businesses so it is important for the government to seek its views over the fiscal situation.  “The government intends to meet with the Chamber regularly to discuss issues candidly, to share ideas and to develop strategies to improve the economy, create new jobs and business opportunities for the Caymanian people,” Bush stated.

The chamber said it welcomed this level of cooperation and pledged its full support to work with government to develop solutions to the current economic challenges that face the Islands. President Stuart Bostock said members were experiencing challenging economic times, but he said with the challenge came opportunity. “This is an ideal time to introduce novel approaches to new business development and to reform the way in which the public sector operates,” Bostock urged. “We must all accept that in order to address some of the challenges that are facing us we must work in partnership and accept that there will have to be some sacrifices by businesses and residents. The Chamber is committed to working with the Government to bring about these changes.”

Government and the Chamber leaders said they were confident that the strength and resilience which has contributed to “Cayman’s significant growth over the past 40 years will continue well into the future.”

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Comments (10)

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  1. Frank says:

    IPO = Best Solution…

    I recently wrote in Viewpoint a study on how to best leverage the assets of the Water Authority – currently standing at $46.3 million in the government’s book – through an IPO on Nasdaq and I’m glad that the Chamber supports the concept…

    It’s a Win-Win situation for all concerned:

    – Assets valuation by the market would more than double to about $109 million, based on the parameters of the other water company in Cayman, CWCO…

    – Government would raise some $52.3 million cash by selling only 48% of the company in the IPO, while retaining a controlling 52% equity worth around $56.7 million…

    – By manning its own plants now operated on a subcontract basis by CWCO, the new public company could add another 30%+ to its bottom line, thus increasing the share price proportionally…

    – A local bank is already interested in doing the IPO to keep the process on-island and local investors would have priority in acquiring the newly issued stock…

    This could be a model to leverage other valuable assets gathering dust in the government books…

     

     

     

  2. Anonymous says:

    I have bought milk that has gone sour from the gas station once to often.  Roll on Sunday opening.

    • Anonymous says:

      Actually, you raise another point there… is it legal here for stores to sell out of date products (still at full and inflated prices) to their customers???  I’ve lost count of the amount of things I’ve wasted good money on and subsequently had to throw away because they were out of date.  People please check your sell by dates before buying if you don’t want to throw good money after bad and if you don’t want food poisoning!

  3. Minny says:

    CNS:

    Please create a poll to see how many people support the idea of stores opening on a sunday.

    Thanks.

    CNS: OK, the poll has been created.

  4. Common sense says:

    Anything but property taxes. Nonono. Can’t upset all those good ole real estate buddies. And who in their sane mind would want to buy a bunch of state-owned operations that do nothing but lose money? Since when did we consider something that was not viable economically an "asset". Weasel words again.

  5. Anonymous says:

    Good suggestions Chamber.  I’ve been saying on here forever (it seems) that we should allow Sunday trading here – even if only between the hours of 10 and 4 or something like that.  Not only would it boost the economy but also alleviate Saturday traffic as the many of us who have no choice but to shop on a Saturday will now have a choice to do this on a Sunday instead.

     

    A national lottery with tickets sold at $1 each would not only be very popular here, but also (if controlled and administrated correctly) generate a heck of a lot of revenue for the country.

     

    If you tax anyone, tax the rich stores who take advantage of our situation by importing goods and then selling on to the public at grossly inflated prices.  At the most 30% above trade price more than covers all expenses including 20% import taxes.  Anyone marking up over and above this (and most charge >100% above trade price) should be penalisedby way of taxes on their exhorbitant profit margins.  This would have a double beneficial effect – it would cap their profit margins and reduce the cost of living here (so far as it relates to consumer goods) to a more reasonable level so that us regular working people can actually afford to put food on our tables for a change.  If taxes ever come to the Cayman Islands it should be the already rich who are taxing the poor in terms of goods and services who should pay, not the already struggling consumers.

    • Concerned Reader says:

      Well said. The rich are getting away and have been getting away with too much, whilst the country’s insfrastructure needs have been unable to keep up with the rate of development.

      Yes, the PPM spent too much at one time, and probably too much for the schools and they should have planned and phased the projects better, but let us not lose the fact that no serious work had been done on roads and schools since the mid 1970’s.

      We have been attracting all and sundry to the Cayman Islands and calling it the 5th largest financial centre in the world, but for whose benefit? How much revenue does Government really get, when compared to say the BVI?

      I submit that the quality of life (by virtue of an exhorbitant cost of living) for the local indigenous populace, has been in serious decline for the last two decades.

      Objectively, whilst the UDP ‘MAY" get away with no new taxes this budget year,(which is wholly dependent on Captain Underpants) someone soon will have to face the music and reexamine our tax-base – which I vaguely recall was on the drawing boards some years ago! I wonder what ever happened to the project and why it was shelved!

      We cannot go on and cater for the rich, without making them pay their way at a much lower rate than the industrialised countries for them to be attracted here. Once we start taxing them properly the OECD/G20 pressure will go away. We cannot continue to pander to the special interests, who oppose any and everything and do not want to give up anything. Where are the suggestions from the financial community.

  6. Concerned Reader says:

    "It was labor that helped build the largest middle class in history. So, even if you’re not a union member, every American owes something to America’s labor movement," said Obama,

    Perhaps Cayman’s problems are partly due to the absence of Labour Unions – who fight for workers as in :

     http://apnews.myway.com//article/20090907/D9AIKGVO2.html

    CINCINNATI (AP) – President Barack Obama declared Monday that modern benefits like paid leave, minimum wage and Social Security "all bear the union label," as he appealed to unions to help him win the health care fight in Congress.

    "They had to be fought for, by men and women of courage and conviction, from the factory floors of the Industrial Revolution to the shopping aisles of today’s superstores. They stood up and spoke out to demand a fair shake, an honest day’s pay for an honest day’s work," he said. "Many risked their lives. Some gave their lives. Some made it a cause of their lives"                                                                                                                                                                                                         

  7. Anonymous says:

    Chamber has some great suggestions..! Good job Will!

  8. Anonymous says:

    Wow, finally somebody has suggested allowing stores to open on Sundays. It is about time, we’ve spent too long letting the church and their backwards and old fashioned brainwashed zealots run the country. People in the Cayman Islands often work long and unconvenient hours and can’t all make it to the stores during the weekdays when they are open, so allowing supermarkets to open on sunday would be a huge boost to the economy.

    How often do you get stuck on a sunday with nothing in the fridge because you forgot to pick everything up on saturday? 

    We market the country as a tourist destination, yet at the weekends when everybody is around, there is nothing open, the bars and restaurants aren’t even allowed to play music. Its 2009 for god sake!

    Let’s open a casino and offer it to tourists and residents alike. It should be a personal choice if one chooses to go into the casino and gamble, and they have the money to do so then why not? Tax the casino on its profits, they won’t mind because they will be raking it in. Plus the thousands of dollars spent every week by residents playing in overseas online casinos will instead be channeled into the local economy creating jobs and wealth.

    I can’t see the government’s "assets" being sold for anything like the valuations which government have placed on them. What serious investor would want to buy somewhere like the turtle farm which loses thousands of dollars every week because it is a third rate attraction which has no potential and no future at all. The value of the land is th eonly thing a buyer would be looking at, but they would want to flatten it and build more hotels/condos and I guess if they werent guaranteed planning permission then the interest would be even less.