Tax review delay news to UK

(CNS): The target date set by the Foreign and Commonwealth Office for completion of the independent review of potential new revenue measures is impractical, the premier has said, and it will not be completed until February 2010. McKeeva Bush told the Legislative Assembly on Wednesday that he had informed the FCO of the change in schedule as the director of overseas territories, Colin Roberts, is visiting Cayman this week. However, at a meeting with the media on Thursday morning Roberts said he was unaware of the premier’s plan to delay the review, which could present a problem as the results of the review were intended to influence the 2010/11 budget.

During his strategic policy statement on Wednesday afternoon, when Bush outlined his government’s broader policy goals for the next three years, he said that the administration’s intention was to seek a wider more stable income base for the country. He said government had agreed with the Foreign and Commonwealth Office to appoint an independent commission to conduct a professional assessment of the options for, and potential impact of, new revenue sources.

The review formed part of the conditions placed on the Cayman government by the OT minster, Chris Bryant, when he agreed to sanction further borrowing that would take the jurisdiction outside of the parameters of the Public Management and Finance Law. However, the UK had asked for the assessment to be completed before the end of 2009 so that the results would assist in formulating the 2010/11 budget.

In the assembly Bush said that the timeline was not possible and that now the results would be submitted to Cabinet by 28 February 2010, two months later than has supposedly been agreed. “The FCO had asked for it by the end of December, but Colin Roberts is here from the FCO and I have told him the timeframe is not practical,” he said.

Roberts, the FCO manager, said on Thursday morning that he was unaware of this development, despite meeting with the premier on Wednesday, and that he had not been informed. The governor, Stuart Jack, also said he had not been told about the altered timeline.  He said, however, if this was the case, the FCO would be asking the premier to accelerate the assessment.  “Because of the time taken to complete the negotiations the time left to complete that study was tight. But I will be encouraging the premier to eccelorate that work,” he said.

Roberts explained that the premier had agreed to include the recommendations for new revenue in the formation of the next budget and give the timeline of when that would be prepared. If the assessment is delayed until February it would be harder for the administration to consider the new measures for that budget. He went on to say that if the review was not completed and there was not an extension of the revenue base, there would be practical problems for the government if the budget fell into deficit this fiscal year.

“The Cayman government would be in the situation of not having the necessary funds to pay its bills,” Roberts said, adding that he hoped that the review would be done as close to the agreed timeline as possible. He said if this year’s budget came out in surplus as predicted there would be no problem, but he noted the approval for the government to borrow was based on this agreement.

Former Ronald Reagan aide and staunch republican, James Miller III, has been asked to chair the commission and will be working with the former UK Conservative MP, David Shaw. Miller told CNS last week that the commission has already began to prepare its work for the assessment and expected it to be a challenging project.