Conservative to lead tax team

| 09/11/2009

(CNS): A former aide to Ronald Reagan and well known conservative economist has been appointed to head the independent commission which will examine the options for new revenue sources for the Cayman Islands government. James Miller III told CNS that he expected that the assessment would bevery challenging. Miller, who will be working with Financial Secretary Kenneth Jefferson and former UK Conservative MP, David Shaw, will also appoint the small team. Although the UK has asked Cayman to introduce direct taxation, Miller’s appointment as chair of the commission is a clear indication that government is hoping for alternative solutions.

The professional assessment aimed at diversifying the government’s revenue base was part of the conditions imposed on the UDP administration in exchange for permission from the UK to extend the country’s borrowing beyond the limits established under the Public Management and Finance Law.

The work has to be completed before the year end and Miller said he and his colleagues were looking forward to the assignment and had already begun to plan the work and assemble research materials. “Let me say that we anticipate that this work will be very challenging, due in major part to the unique nature of the Cayman’s economy,” he said.  “We certainly have our work cut out for us and look forward to visiting the Islands and working with officials, who will no doubt aid our work immensely.”

The commission is expected to look at where and how Cayman can generate more cash for government coffers and how that will impact the economy, as well as look at cuts in the operating budget.

Speaking at last week’s press briefing, the premier, McKeeva Bush, said the team would be looking at possibilities for direct taxation as well as other proposals. However, given Miller’s political views on economics and as a supporter of using the private sector in government, he is more likely to steer towards alternative sources of revenue and reduction of government expenditure using private finance initiatives.  

The team will be expected to review the present revenue-generation mechanisms and how these have been affected by competition, the global recession and internal actions. They are also expected to make recommendations for the improvement and expansion, and more efficient operation, of these existing mechanisms.

Miller and his team will also be examining estimated government revenue sources and expenditures for the 2009-10 budget year, and recommending measures to ensure it will balance.

Alternative financing for government’s current short- and long-term debt will also be assessed in order to identify possible savings. Actual government policies will be reviewed to recommend cost-effective approaches to spending, as well as ways to reduce spending.

Bush said the assessment would be set against Cayman’s location, size, population base and cultural background to determine if any potential sources would provide a more sustainable revenue base.

“In making this assessment, the commission should consider the impact of any form of direct taxation on overall economic activity and examine, in particular, the impact on the attractiveness of the Cayman Islands as a financial centre,” the premier said. He added that the commission’s recommendations would provide government with a five-year or longer projection of revenue against expenditure, including a discussion of the optimal size of government in relation to its GDP.

When Chris Bryant, the FCO minister with responsibility for overseas territories, gave the government permission to borrow a further $225 million to balance the 2009/10 budget, he said it was on condition that Cayman would increase its future revenue base and move away from its dependence on its status as a tax haven.

“In the present global economic and political environment, I believe that it will be increasingly difficult for Cayman to rely on indirect taxation for its economic future,” he wrote on 8 October. “When the independent report on further revenue options is completed, I very much hope that you will determine to extend your revenue base on a more equitable base, with some form of progressive, direct taxation.”

However, James Miller, a conservative economist and the man selected to undertake the independent assessment is a well known opponent of increased taxation and described by pundits on the right as a conservative hero because of his opposition to tax increases and support of free-market principles and efforts to increase the role of private enterprise in the operation of the US.

He is currently senior advisor at Husch Blackwell Sanders, LLP, an international commercial law firm and also a member of a number of think tanks and organisations on the opposite side of the political debate over taxation from the current UK government.

Shaw, who is a chartered accountant and finance expert, was a former Conservative Member of Parliament for Dover who lost his seat in the 1997 election, and was involved with parliamentary committees covering finance, taxation and financial services regulation, among others.

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  1. Anonymous says:

    If we are buying into this foolishness, expensive foolishness by the way, we are one of the most stupid bunch of people God has ever created. Why the hell are we seeking out the guidance of a Reagan advisor?  Do you people know or even understand the history of Regan’s "trickle down economics?"  It all trickled down to the mess the U.S. is suffering today.

  2. Animosity says:

    Another form of operation Tempura in the making, Mack style.

    This Guy will collect a fat check in exchange for advise we already got for free from the UK.

    Cut the civil service in half and start taxing the salaries and properties of Caymanians. I guess Mack will say that he needed a second opinion. OMG.

    • Anonymous says:

      "Cut the civil service in half and start taxing the salaries and properties of Caymanians".

      I gather you are expat. The majority of civil servants are Caymanians. Why is that you suppose that only the salaries and properties of Caymanians should be taxed? The fatcats are mainly expat, why not tax them?  

      • Animosity says:

        You were so quick to bash me you did not even try to understand what I said.

        I will repeat and ask you to read slowly and understand me.

        I said this Guy will collect a fat check for advice that was given to us by the UK for free. That advise was to cut the civil service (Government expenditure) by fifty percent and start taxing caymanian salaries and properties.

        I am Caymanian for your information and I am neither PPM or UDP.

        Spend a minute to read and understand before you blow off on anything one says that you dont comprehend.

        • Anonymous says:

          Perhaps before insulting me you should re-read your own post, slowly if that helps. You did not say "…and start taxing caymanian salaries and properties". You said "…and start taxing the salaries and properties of Caymanians".

      • O'Really says:

        I’m curious as to why you claim the fatcats are mainly expat. What makes you think this? Does an expat fatcat own the mansion across the road from Smith’s Cove? Did an expat fatcat fund movies set in Cayman?

        I ask because walking among us are some of the wealthiest people anyof us will meet and they are Caymanian through and through. Are they exempt from contributing to Cayman’s welfare simply because of their nationality? This is to an extent a rhetorical question, because one look at the last budget increases will tell you the answer is yes.

        • Anonymous says:

          Yes, there some Caymanian fatcats and yes they are mainly the established merchants. However, I maintain that most of the fatcats here are expats. This was all cleverly disguised in that report that was done a couple of years ago that suggested that Caymanians were the top earners. The question is, among those of us who hold jobs and and earn at least $250,000 per year (my definition of a fatcat) what percentage is Caymanian? I think you will find that that the number is less than 10%.   

          I was responding to what appeared to be the suggestion that Caymanians alone should bear the taxes. I was not suggesting that no Caymanians should bear any.   

          • O'Really says:

            I see where you are coming from, but I can’t help but feel that you are only focused on the financial service industry. I could argue that many of those you are counting as expat are in fact Caymanian by virtue of status but I suspect they don’t count. I’m not familiar with the income survey to which you refer, but I wonder whether what you call a clever disguise, I would call an absence of discrimination between status holders and born Caymanians when defining Caymanian.

            But what I am really interested in is why those who earn significant amounts in the local economy somehow don’t count or raise the same ire. You make Cayman’s merchant class sound miniscule but it is far more extensive than it first appears and probably far more difficult for a Caymanian to break into than the average financial service company. I was amazed to read that Bodden Shipping stood to lose $6m if they lose the tender business. That’s a lot of money to lose, but a lot of money to have been earning as well. There are a lot of Caymanians earning $250,000 pa plus who do so outside of the financial service industry and by your definition, they should be fatcats but somehow aren’t.. 



  3. Anonymous says:

    I believe that Premier Bush is trying his best to bring this country from the brink of disaster and it’s a shame that so many people, probably disgruntled PPM supporters, cannot see that. They are so quick to criticise yet offer no solutions other than to downsize the civil service and implement direct taxation. Yes, there are many overpaid civil servants, but fixing that alone won’t solve the problem. As for direct taxation, well, any idiot knows what will happen if we implement that. At least the UDP are willing to explore the options available to us and are trying to keep us from eventually being "taken over" by the UK. This is no time for us to divide ourselves, but rather to come together to find solutions which will benefit us and our families now and for the longer term.

    • Anonymous says:

      As I understand it Premier Bush’s speech  was neither magnanimous nor conciliatory, only combative, hateful and divisive. How are we supposed to come together under a Premier like this? By suspending our commonsense and blindly following him? 

  4. Big government? says:

    Presumably a conservative Republican’s review of the Cayman fiscal base will come up with one obvious and immediate answer – Government is too big.   The civil service needs a gastric bypass to trim its fat.

  5. GC Ninja says:

    Don’t worry, lower and middle class Caymanians, the wealth will trickle down to you…  eventually. Reaganomics worked out really well in the US. Well, at least it did for a few CEOs.  I’m sure everyone will be really happy 20 years from now if we copy Reagan’s example.


    For those Caymanians who may be too young to remember, the late Ronald Reagan is hailed as a god by right wing loonies in America but it was his reign of economic terror in the 80s that set the stage for most of the economic disasters that came home to roost in recent times.

    I can’t believe our government is dumb enough to seek out an economic expert with "Reagan advisor" on his resume. Oh, wait, I can believe it. These are the people who think Pirates Week is an endorsement of raping and stealing. These are the people who think Cayman’s economic future depends on more cruise ship tourists buying t-shirts. These are the people who think it’s a swell idea to build a massive dock next to Seven Mile Beach without doing an environmental impact study. Yeah, a former Reagan advisor is right up their alley.

    What’s next, Chuck Coulson to redesign our school system? Glenn Beck to write a new national anthem? Sara Palin to run the Dept. of Environment?

    I can’t figure out which is worse, Kurt Tibbetts and the PPM doing nothing or McKeeva Bush and the UDP doing a lot.

    We are so screwed.

    • Anonymous says:

      I am giving you a ‘thumb up’ for this one. I live in the U.S., and believe me, it was no walk in the park for low and middle class families. In fact, Reagan did not believe in social programs like social security/medicare for elderly, or programs for poor families w/dependent children. Reaganomics had the lower & middle income earners paying the highest taxes.

      Well, I guess the last thing for me to do is, close out my last account there. Time for me to make a bowl of buttered popcorn, and watch!

      A side note to the poster who wrote this is a good thing to prevent anothertakeover-are you serious! Take a look at how we treat our territories and tell me if you still agree. Puerto Rico, U.S. Virgin Islands (St Croix, St Thomas, St John), Guam, American Samoa…..these people are on their own, so much so, some of these islands snub their noses at us when we travel there.  

  6. Anonymous says:

    some sort of direct taxation is unavoidable if you refuse to tackle the civil service.

  7. Anonymous says:

    I take back all those nasty things I have said about the new Premier!

  8. Anonymous says:

    Hmmmm, first we invite Oliver North to address our young leaders then some Reaganonomist to help fix our economy! Reaganomics was a finaicial policy to make the rich richer. How many US industrial cities were decimated by that policy? Just ask working class folks in Cleveland, Pittsburgh, Detroit and dozens of other cities. All you who have a big ‘yeah Mac’ for this move should educate yourselves on recent economic history. If we’re looking to give big $$$ to past US political advisers we should seek out someone from the Clinton administration which restored the US economy after Reagan unbalanced it in favour of the ‘haves’ (GB1 simply carried Reagan’s policy through his term). What can we expect next  – Gordon Liddy to join the RCIP or more likely, create the Premier’s secret service????.  Careful Cayman. 

    • whodatis says:


      This is most likely nothing but another step taking us closer to the plight out of which so many western countries / cities the world over are desperately trying to crawl.

      This country has changed so much – never before have I heard so many young Caymanians expressing their desires and hopes of leaving for good.

      Sad to see.

    • Anonymous says:

      I would have preferred Clinton’s economic advisor, Robert Reich (one of the greatest economists to ever live), but having Miller provide this level of guidance to the McKeeva dictatorship, is certainly a step in the right direction (North instead of East!).

  9. what a mess says:

    Not reassuring!

    Another expensive study to collect dust…while we already know full well what needs to happen.

    Reduce Govt. expenditure (especially at senior levels) and impose direct taxation in the form of income (not payroll…we know the big boys will get around that with "bonuses") and property taxes (sliding scale with rich paying higher).

    But none of this should happen until the urgent need for anti-corruption laws (with teeth) are in effect. Real laws that ensure real transparency and accountability with real teeth to ensure stiff penalties for those who engage in corruption or ortherwise sqander the country’s finances and reputation.

    What Cayman has been doing for a long time now is: "short term gain for long term pain"…That needs to be turned around 180 degrees to :short term pain for long term gain".

    Of course very few politicians have the statesmanship to do so because his/her main focus is getting re-elected…continuing the status-quo of his party.

    Let’s see if we have any statesmen left…becau tings na looking well!

  10. David R. Legge says:

    I’ve been familiar with Mr. Miller’s work and financial acumen for years. He is a highly regarded professional—world class—and we in Cayman are fortunate to be the beneficiary of his knowledge and wisdom.

  11. Anonymous says:

    Why isn’t the Auditor General seeking to delay this deal by saying it should go to Central Tenders Committee?

    Maybe its because the UK wants it.

    • Anonymous says:

      Or may be it does not meet the minimum requirement for CTC which as I recall is around $250,000. Do you think there might be some difference between the cost of such a report and the $150,000,000 port?

      Please stop with this nonsense about the AG being involved in a conspiracy with the UK. The AG is doing his job. Making these outrageous allegations only make those who do so look stupid.  

  12. Anonymous says:

    How reassuring for the status quo!

    A tax review team headed by a veteran of the  Reagan trickle-down economics dream team, comprised also of a UK conservative and I suppose some local choir boys.

    Surely  a team  handpicked  by Cayman Finance!

    Sorry middle income and working class folks, the burden of funding the  public sector is going to continue  to be  wholly and soley yours.

    Cayman Finance will continue to ensure that we commit unswervingly to the the socially useless activities of global finance that will pay  the 30 billion  of bonuses to  executives of Goldman Sachs and other mega banks next month.

    You can though join in the task of making it ( the public sector) smaller and more efficient.

    After all you too can be part of the solution.

    • Joe Average says:

      He was an affable kind of idiot and as many believed, too stupid to come up with a bad idea. After the cheering I think many in the U.S. were surprised how little of Reagan’s theory of Trickle Down  "trickled down".  The only ones weren’t suprised were those that had convinced him it was a good idea. He would listen to anyone with an idea.  Especially those that gave him money.  A true statesman.

      Let’s see what they come up with but I have a feeling there won’t be enough lifeboats and it will be the Captain, Crew, and Executive Officers first.

  13. Concern Native says:

    Say what you want to about Mr. Bush but he has surrounded himself with some brilliant minds who will steer the good ship in the right direction. Appointing such brilliant minds like Miller can only work to rectify Cayman’s public service.

    But with all the appointments comes a small price; what do we do with the final report whether good or not so good? We’ll just wait and see.

    • Anonymous says:

      I hope Mr Miller will-unlike other consultants-not let himself be led astray by the local input on his team. Ken Jefferson is a pleasant young man, but in his total failure to make his Portfolio of Finance do what they are paid VERY highly to do, he is/has been part of the problem not the solution. XXXX Mr Miller, as part of getting hold of waste in the public sector must let such people know Government does NOT owe them limitless employment; it only requires competent employment (as a minimum). Please Mr Miller, look also-or demand that others do- at the statutory authorities and civil service departments and their ridiculous salaries and junkets to Monaco, China etc etc. What does Government get from the Shipping Registry for all these business class trips to every corner of the globe? What do every member of the Protocol Office do, every day, from 8:30 to 5:00 to justify their existence-how many celebrities do we have coming here every day? What about Hazard Management when-as is mostly the case- there are no hazards? And tell Commissioner Baines, he may wish he had 55 more policemen, but we can’t afford them (and all the benefits for them and their families). We’re already policed like a former Iron Curtain country-make the ones we have do their job.

    • Makam says:

      You are obviously very familiar with Mr. Millers past work….no….Ahh I thought not. Notice I say work and not success because it wasn’t!

      You are simply voicing the UDP’s dictator’s propaganda!

      Small price to pay..I wait to hear what you say when we get the bill!..more UDP propaganda no doubt.

      Can anyone remember the money paid for the consultancy work based on the New Zealand economic model? That was a great success wasn’t it….NOT

  14. Anonymous says:

    Good move, Mr. Bush!