UK agrees to cuts not taxes
(CNS):
Following last week’s visit to the UK to discuss the country’s fiscal situation and the new Miller report, the premier said this morning that the UK has agreed to the Cayman Islands government tackling the 2009/10 budget deficit through cuts and not taxes. McKeeva Bush said at this morning’s press briefing that the FCO was allowing the CIG to work on a three-year budget plan that focuses on reducing public expenditure rather than new revenue sources. Depending on the extent of cuts government can make over the next three months and the three-year plan, Bush said the UK has also agreed to limited borrowing if necessary at the end of this year to address the deficit. But, he said, the FCO has stated it is not willing to review the current net-debt ratio limit for more borrowing other than for emergency situations.
Bush described this recent meeting with FCO officials as very good, and even though they were still keen to see Cayman introduce taxation, they were willing to allow government to try and tackle the budget imbalance through cuts in public service in the first instance. Armed with the Miller Commission’s report, the result of the independent review by James Miller and David Shaw, Bush presented his case to the UK based on its recommendations, which focused almost exclusively on spending cuts as the way forward for Cayman.
The premier said that the UK had agreed to most of the points made by the report and agreed that CIG needed to cut operating expenditure. As a result, Bush warned the civil service that there would be significant cuts coming and also spoke of job cuts in the service over the next five years.
Bush made it clear his government agreed with most of the recommendations in the report and intended to implement some of them and had told the UK that he wanted to pursue these recommendations as an alternative to any kindof direct taxation.
The report states that Cayman should not introduce any direct taxes, that it privatize and divest government assets, restructure government departments and statutory authorities, cut civil servants salaries and benefits, and reduce the head count, as well as increase the retirement age to 65.
The FCO generally agreed with the Cayman Islands Government on the majority of the recommendations made by Miller, the premier added, but the UK was disappointed that the report did not recommend broadening the revenue base to include taxation.
However, the premier said the FCO seemed to understand that Cayman needs to examine a broadening of the revenue base in a way that protects the country’s economy. Despite the fact that the UK said it had wanted to see more analysis in the Miller Report on the question of what types of taxes may be suitable for the Cayman Islands, Bush said that, in the end, it accepted the goal of the CIG to secure fiscal sustainability by reducing and controlling its expenditures and its borrowing levels.
The premier rejected the opposition’s idea of extending net-debt ratios and further borrowing, which he said would undermine the principles of sound fiscal management.
"Over the past few weeks much has been said, particularly by the opposition, regarding the government’s approach to addressing the current fiscal challenges, which they largely created, as well as on how we might engage with the FCO,’ he said. While he acknowledged the criticisms made at him for continuing to point the finger of blame, he said the problem was the PPM was to blame.
“Who do you think made this mess?’ he asked. “The man in the moon?” Again, he reminded the country how he had warned the previous administration about over spending and extensive borrowing on the eve of the economic crisis. However, he said he was told by the then Leader of Government Business that "not on the kindest of mornings" would he have listened to Bush.
Th premier said historically Cayman had always borrowed prudently and it was the last administration that had caused the problem of excessive borrowing and spending, which his government would address.
“Throughout this crisis, the government has held strong to five key principles that still hold true today after the meetings with the FCO and after reading the Miller Report,” Bush stated. He said his government was committed to addressing the rapid growth in the public sector, and while the elected arm of government may not have control of the civil service, as Minister of Finance, he said he was concerned about the lack of control over public expenditure and he would ensure cuts were made.
Category: Headline News
What I do not understand is that if Mr. Bush is so keen on selling govt. assets as a means of balancing the budget why didn’t he start with the obvious – those assets that are not essential such as its 24% shareholding in Sagicor which his govt. acquired after Hurricane Ivan as part of the insurance settlement. He seems to have missed an opportunity now that shares in Sagicor have changed hands from Sagicor Jamaica to Bahamas First Holdings Limited and the company’s financial strength rating is under review with negative implications, but it may not be too late.
Govt’s shares were valued at some $20m at the time.
Excellent point. You’ve obviously put some thought into it unlike MacDinejad and his muppets.
Cut the civil servants by 1/2 and lets see what will happen and at the same time give concessions to the investors. With all the millionares living and operation businesses here I wonder why we even have a deficit.
Welcome Caymanians to Rich or Poor. I invite you to the funeral of our Middle Class, just look around and see what is happening do you really think it’s all because our young men want to kill each other.
When the majority of any people is disinfranchised, working poor or unemployed this is what happens. The leaders of this country had better wake up and come together and stop listening to consultants that have no idea of the dynamics of this country.
I want to hear it from the UK direct and not by way of mouth through McKeeva Bush.
This is the man who told the people of Cayman the reasons why he HAD to sell the Government Administration Office Building, and then told us he did not say it was up for sale, so how can we trust what he is saying the UK has said, is in fact true.
I am sorry, but this is reality and "once bitten, twice shy" so for him to tell us now that the GAOB will be on the table for sale because that is what the UK advises, to me is not believable.
I suppose that if I was to recieve $11million for the sale of anything, I would make sure that the sale would go through, but maybe thats just me!
I highly doubt the FCO would ever publicly acknowledge the information shared during there meeting held with the CIG. You either take the information provided by thePremier or no information at all. Government’s correspondence with other nation-states is protected under the FOI, therefore, it would not be released until years from now (even when subjected to the public interest test) because it could potentially damper relationships between nations. Furthermore, developed nations adhere to this internationally accepted procedure. So again, requesting the FCO to release is ridiculous.
That aside, I will openly admit that the civil service needs reduction, however, if civil servant are required to pay 50% health insurance/pension, then there salaries should be increased to reflect the required expenditure. No one can honestly expect a person to be employed under the premise of lower pay with added incentives of paid healthcare and pension contributions to openly accept a reduction that could potential take 20-30% of there salary.
That my 2 cents anyways.
Folks:
This is Good News to my ears… that the UK is willing to go that extra mile with us. However, let us not lose sight of the ball.
Making government shrink in size is SERIOUS BUSINESS!
Caymanians should be informed of the pros and cons about this process. Reducing the size of government consists of making money-transactions that could cause political opportunist, especially, backers of a government party to appropriate funds for their own gain whilst selling or transferring the ownership of public assets. Once the certain government entities are privatized (depending which entities), the new owners could concentrate the wealth into the hands of foreigners and disregard Caymanians. The entities could economically control the Island like how CUC does; moreover, these entities could provide little benefit for the hardworking local.
These are conditions we don’t want or need for our economy!
I would recommend that a “public-private partnership” is a safer and smarter way of trimming or cutting the size of government. A public-private partnership is where a business entity is funded and operated through a partnership of government instead of “privatization.” It is a sort of a partial ownership of governmental services where government can have some legislative control in case of civil injustices and economic downturns. I would suggest people go on the internet and research about public-private partnerships. I think it is a safer route than privatization and the selling of government assets. Our politicians should know this option very well!
France is one example where you have instead of privatization, public-private partnerships with other businesses or companies. The cost of using services that are no more 100% government owned, can be borne exclusively by the “users of the service” and not by the country or “taxpayers.” That way government would be less burdened without increasing extreme fees and duties upon others. The private sector would have a small but effective Civil Service to financially maintain. The smaller government is, just consisting of ESSENTIAL SERVICES, the more easily it’s managed – commonsense!
Right now there is a state in Germany that is planning to buy shares in an energy company, identified as “E.ON.” Maybe they have already bought shares in the company. The purpose of retaining shares in the said company is an attempt to control the spiraling costs, which the company has incurred on the people of the state. I suggest Cayman Islands learn and follow this costless example.
Peace
Dear Mr Premier
We hope that today is the beginning of many changes that need to be done to ensure the continued prosperity of our country. Take the politics away and lets all start to work together for the future of our nation. You cannot keep blaming the PPM for all things, because all the projects they did that you now blame them for in our fiscal problems, were all projects and plans from your precvious administration and time in power so you are actually equally to blame for the country’s problems. We are sick of listening to you blaming everyone other than yourself where it all started many years ago. STOP the blame game and get on with business in the best interests of this country.
The following are recommendations of the measures that need to be implemented for our future success and continued prosperity as a nation.
1. Honest and transparent Government at all times.
2. Zero tolerance for corruption in Government whether it be obstruction, influence or favour by Govt MLA representatives or the civil service. (How else do you expect to win the confidence of the electorate if you are not honest and ethical at ALL times ?)
3. Reduce the cost of Government (the shear cost of Govt is destroying the future of the country)
4. Reduce civil service salaries (Cayman’s civil servants are higher paid than the private sector)
5. Place the civil service on the same exact benefits package as the private sector 50/50 health and pension with a 10% pension only (change the law if that uis what it needs)
6. Increase civil service efficencies to levels equal with the private sector by the employment of efficency auditors to monitor and correct the operations of all departments
7. Reduce the size of the civil service – 110 / 1000 population – you have to be blind not to see where our problems lie. This is ridiculous and makes us the laughing stock of the world.
8. Eliminate civil service overtime (they are paid salaries and salary employees do not earn O/T)
9. Eliminate unpaid leave, and limit leave to private sector conditions
10. Ban the practice of hiring back retired civil servants and paying them whilst at the same time they are receiving generous pension payments.
11. Eliminate part time civil service employees.
12. Eliminate the employment of all civil servants with second job or who have businesses they own and operate in Govt time.
13. Commence only infrastructural projects to stimulate the economy. ie. airport expansion, roads, port, cruise ship facilities etc etc.
14. Sell off Waste Management, Sewage, Boatswain Beach (the premier’s white elephant), Cayman Airways as a start for the privatization of Govt and later consider the privatization of ports and airports with Govt retaining ownership of the properties under lease to the private sector. (This is what is doen all over the world so what makes cayman have to be different – is Govt running these operations more efficient – NO)
15. Get the private sector to reduce their fees, charges and rates for Cayman to become globally more competitive.
16. Eliminate all customs duties to replace the loss of earning to Govt with a VAT/GST tax (say 5+%) which will raise far more income for Govt than the present system. This would satisfy all western economies that Cayman has direct taxation and is not a tax haven with zero tax.
17. DO NOT implement a property tax because if Caymanians would not pay a simple $100 garbage fee, who is going to pay their property taxes and besides Caymanians who own large tracks of land (100 acres) are they going to be happy about paying property tax. Don’t go there !
18. Deal immediately with our No. 1 priority which is crime and greed.
19. Implement cargo X-ray scanning equipment for ALL cargo entering and leaving the country.
20. Implement a multi-scanner, coastal radar detection system around the coast of Cayman.
21. Zero tolerance on gangs and crime with amended laws and harsher penalties.
We are only the care takers of our country for future generations so I encourage all of us to join together "Without Politics" and get what needs to be done – DONE – "a very concerned caymanian who loves our country and our people"
"1. Honest and transparent Government at all times.
2. Zero tolerance for corruption in Government whether it be obstruction, influence or favour by Govt MLA representatives or the civil service. (How else do you expect to win the confidence of the electorate if you are not honest and ethical at ALL times ?)"
What are you smokin son ?
Agree with everything except the VAT/GST.
Love your suggestions, however I have a few problems that are mentioned below:
4. Reduce civil service salaries (Cayman’s civil servants are higher paid than the private sector)
SOME civil servants are higher paid than the private sector. Perhaps 10 – 15% of civil servants are paid unnecessarily higher. But the other 85 – 90% is paid substantially less. Not everyone who works in the civil service is over-paid and under-worked. There is alot of us who work un-godly hours and still receive the same pay-check, no over-time but just time-off. You can ask the many people who have worked for the civil service and left to the private sector why they left, I’m sure their reason was not for a change of scenery! Another thing, the government isn’t the only employer who pays 100% insurance, there are many private companies, law firms and more who also provide their employees with 100% coverage, if the employee has no dependents.
Civil service employees received a measily 3.2% pay-raise only to account for cost of living increase. Trust me when I say that $50 – $100 extra a month is not even noticeable in contrast to the ridiculous rates we pay to CUC, gas and other constantly rising expenses! The private sector however, most of these employers give pay-raises according to their employees performance, ALSO many private employers give their workers bonuses. Bonuses in the civil service? HAHA! what a joke!! And as for pay increases based on performance, unfortunately we all get the same increase as Joe or Tom who sits and does absolutely nothing all day. We need to weave out all the Joes & Toms, yes I completely agree!! But please note, the amount of Joes compared to the large majority of us who do hard work is not enough to punish the innocent for the small population of guilty.
We hear of pay cuts for civil servants, but there is no mention of a reduction in the recent cost of living increases, such as customs duties, etc. to compensate for these cuts. The 10% reduction in salary and added 50% insurance, can equal up to a 20 – 30% pay cut for many civil servants who are already under-paid. It amazes me how many people can sit and judge everyone who works in the civil service when they have never worked there, themselves.
"Never criticize a man until you’ve walked a mile in his shoes!"
15. Get the private sector to reduce their fees, charges and rates for Cayman to become globally more competitive.
In addition to your other statement of increasing duties by 5%. This kind of seems like your the reciprocal of Robin Hood, stealing from the poor to give to the rich. See these increases in duties will affect Caymanians MASSIVELY. Because the primary reason we travel, is not for pleasure, but because its the only way we can AFFORD to buy clothes, etc. Not only because of affordability, but also for variety. There is very little resources in cayman, and everyone seems to want to get rich quick, which is reflected in their prices, along with the high duties they pay like we do. Which makes it almost impossible to afford.
8. Eliminate civil service overtime (they are paid salaries and salary employees do not earn O/T)
Salaried employees don’t receive O/T ? Where? on what planet? The only salaried employees that do not receive o/t are those at management level, because they are already generously compensated and o/t is a part of their job.
12. Eliminate the employment of all civil servants with second job or who have businesses they own and operate in Govt time
Maybe those with 2nd jobs aren’t working for greed but just to have food on their tables and lights on to see where they are going at night. With CUC rates costing almost 40 – 50% of what we pay in mortgages, it would be the only way some people can survive, because after all, contrary to popular belief, we are not all paid generously. Who in their right mind would want to work 2 jobs? unless they absolutely had to!
Now that the writing is finally on the wall I sincerely hope that our present Govt. will now follow through and keep down expenditure down as promised in the press briefing today and lets get the islands back on their feet.Stop the blame game Mr.Premier and go about your task with open arms to the Opposition and likewise from their side.I am a firm believer that ONLY by working together will we achieve the level that we need to get back to.
AMEN!
Was worried that they were ignoring the people of the Cayman Islands.
CUT! CUT! CUT!
McKeeva is a pit bull and no politician currently in the LA would fight harder in London for the Cayman Islands.
Don’t get me wrong, he’s not perfect but he will stand up to the FCO.
I am very pleased with his work in this matter.
Hope he nah fool as a pittbull!
He must really think that we "fool-fool" for real!
As ifwe did not suspect that IT would happen!! Wow, what a surprise Big Mac! You really had us all fooled (just kidding). It is my opinion that Big Mac took the sale of the new Gov building off the table because the Cayman people were so upset by his proposal to sell (or lease, or did he say not sell, or…..whatever)! Now that he has arrived back from the UK with his mighty-not sidekick, he announces to the people that the UK has ordered him to sell the building & that more than likely he will "have to put it back on the table" (to quote him). Now really people, did he fool anyone?
This is precisely why the "Chuckie march" did not take place, because the people knew that when Big Mac got back from the UK there was going to be news that we would not like. He fooled no one. The man cannot be trusted! Anyone who can publicly say the new Gov building is for sale & then later say that he did not say so cannot be trusted. I am sure I heard sometime back that this man had claimed that he had gotten baptised & was a born again christian. That recent trip to Cuba must really have taken a toll & done some damage. A whole lot of backsliding! If a person can bend the truth so much they are capable of much worse!
Can’t wait for the PPM’ers to get all over this one…Look out here they come!!!
Good job McKeeva, just try to stick to your guns. The UK is standing behind you so let Chuckie and the "rabble rousers" march on them. Good luck with that one though!
Poor blind soul….
You’re a poor blind idiot….
As long as they don’t cut the Police budget :- (
Thats our biggest waste of money. The uniforms need to be changed to cheaper material which would encourage them to get out and work.
MAC sounds like A BROKEN RECORD!! He has nothing else to say so he keeps harping on blame.
Doesn’t he "GET IT"?? We are tired of hearing it, XXXX and GET BUSY!
Just look at this small section cut from the above article;
"Over the past few weeks much has been said, particularly by the opposition, regarding the government’s approach to addressing the current fiscal challenges, which they largely created, as well as on how we might engage with the FCO,’ he said. While he acknowledged the criticisms made at him for continuing to point the finger of blame, he said the problem was the PPM was to blame."
How many blames in the above?? FOUR!
I recorded this mornings broadcast from the radio and my friends and I just invented a new drinking game. Every time the economic situation is blamed on the last administration, you have to chug.
We’re playing Thursday nights at XXXX for those of you who would like to join in. But please leave your keys at home. You WILL be drunk and not able to drive home.
Let’s git XXXXX!!
See you there
Premier Bush is 110% absolutely correct. The PPM created this financial mess that the Cayman Islands is now experiencing, but yet they want the UDP to take their advice on financial matters now ???
I say Premier Bush, "Kick the PPM to the moon, that is where they all need to be" !!!!!
We, the PPM, would much prefer to be kicked to the moon than to be kicked into hell which is where the UDP is headed! Time longer than rope & the UDP will be exposed in due course! And yes, I am PPM! XXXXX. TURKS & CAICOS, here we come!!!!
And yet another blind soul…yes, you 17:04
Wendy, I hope you don’t listen to McKeeva and reveal the names of the bloggers. He wants to know who we are so he can vindicate us and the poor Civil Servants. We need a voice in this Country without the threat of vindication or suppression. Keep up the good works and do not become intimidated by our dictator.
CNS: We have no intention of revealing the names of bloggers. In almost all cases, we don’t know them ourselves anyway.
"Your name will go on the list, vot is your name"
"Don’t tell him your name Pike"
Ref: Dads Army (British humour)
Excellent news! Well done McKeeva!
On the 2nd March 2010, there was a query made by the Premier concerning three Civil Servants who were still on the payroll, but not carrying out Civil duties. Can CNS shed some light on what has taken place, and if any cuts WILL be made to their salaries?
Many civil servants and politicians put aside their political/personal views and work together. Would it not have been the ‘Christian’ thing to do and allow these three to keep their jobs? Ms Drummond is extremely knowledgable regarding the financial industry. Why do we have to find a replacement for her and cost the Gov’t a whole heap a money by doing so?
Congratulations Mr. Premier.
Well done!
I believe we are on the road to recovery.
Ron Kipp
I would have much rather seen something on the front page about Cayman’s own Selita Ebanks on the premier of Celebrity Apprentice last night. Our XXXX premier just seems to keep saying the same thing.
I listened to the Rooster talk show & the UDP press conference this morning & all I could hear was the same old tired BLAME BLAME BLAME! The premier blamed the PPM, he blamed Ezzard Miller, he blamed bureaucracy & he blamed the people. What I did not hear was any blame on the UDP, past & present! how many times does it have to be pointed out that the elections was 10 months ago, & the UDP won the elections & they are now the government. They said they wanted the job & promised us that they would fix whatever problems was there! I have not seen anything that they have done in 10 months, & this is coming from a person who voted straight for them. We can no longer live on blame. There has been enough travel & money spent in the last 10 months to not see something positive. I think that time has passed the premier by, & we need new leadership (Rolston) because the situation is simply getting worse, & this mornings radio show & conference both confirmed it for me.
All things considered, not a bad outcome to this. What remains to be seen however, is government’s resolve in tackling the root problem – the debit side of the P&L. While I agree with many that have said on this forum that civil servants’ pay needs to be brought into line with the commercial realities of the day, I think the far more important thing just now is to reduce overall expenditures. If this can be achieved by not touching civil servants pay then fine.
Any expectation that revenues (at least from the traditional sources) will return to what they were a few years ago is just plain unrealistic. We’ll probably never see hedge funds back up to the c. 10,000 mark. The combination of increased competition from places like Singapore, Dublin and Luxembourg and international initiatives which Cayman has no hope in fighting like UBTI and EU AIFM, will continue to gnaw away at Cayman’s historical dominance as the jurisdiction of choice for funds. Also, there is now relatively little "real" fund administration takes place in Cayman as fund administration shops continue to leave or downsize, crime will continue to cause downward pressure on tourism and professionals looking to call Cayman "home" for a few years, and anyone with half a brain would be crazy to spend unnecessarily with all of the uncertainty that currently exists. There is a limit to increasing fees and duties (euphemisms for taxes in case anyone was ever in doubt). Just one look the last week’s report by the Statistics Office should prove to government that demand is indeed elastic. Government has to learn to manage the country’s affairs on less revenue.
I’m confused. We are already over the net-debt ratio correct? If this is true than the UK has said no more borrowing. If the government is potentially 100 million in defecit at the end of the fiscal year which is only 3 months away then how does this get resolved?
Other than firing all of the government employess not on a contract (ie all of the local government employees) I don’t see how this is possible. The cost to breach the contracts of expat workers and pay for their relocation (as is it is in all of the contracts) would actually make the budget worse in the short term.
What am I missing here?
Probably your job
Well, there goes the rest of the middle class, and McKeeva’s real estate buddies will live rich and happily ever after.
Civil servants need to contribute to their own healthcare insurance just like anyone else. They are no better than other civilian citizens and should not get special treatment; this is discrimination.
They need to start contributing to their insurance premiums monthly.
We as tax payers can not continue to carry these rude entitled civil servants on our backs. Its not fair. The C.I. Govt is the only Govtt. in the world doing something as stupid as paying 100% premiums for the civil servants. the fact that they are guaranteed a job by Government should be appreciated by them but paying l00% of their insurance premiums. This is too much and has to change.We are in a recession and some adjustments must be made.
Make the adjustment with their insurance. Make them contribute its the right thing to do. There’s no need for a meeting, this is a necessity.
It is one thing to say you are going to make cuts.
It is quite another to actually make them.
Good luck McKeeva….You’ll need it.
Time is running out. Tick..Tock..Tick..Tock.
The fact that the UK has agreed to spending cuts rather than taxes is good news.
Now lets see whether the cuts are applied to the public funds that politicians spend on themselves, their properties, their travel, their cronies, "advisors", "consultants", and personal servants, or only to the people with no political affiliations.
The cuts will not be well received by many of the tax payers of this country unless it is clear that the politicians have stopped squandering the limited resources of this country on their own extravagent life styles and those of their cronies.
Hopefully a budget line by budget line review will be published identifying where the cuts are being made and whether cuts are being applied to the current waste of our country’s limited resources.
So we have some breathing room, but now comes the hard part. Gov’t will have to keep to the program and carry through the difficult process of cutting Gov’t expenditure.
If it succeeds, the prize will be huge. All the world’s governments (UK included, are facing similar challenges. Cayman can show the way and again become an attractive place in which to invest if it can allow investors to keep their profits and not overly interfere with their lives. Inward investment = jobs.
At first I thought Bush had turned over a new leaf… and then he blamed the PPM yet again… leopards don’t change their spots eh?
"The premier said that the UK had agreed to most of the points made by the report and agreed that CIG needed to cut operating expenditure. As a result Bush warned the civil service that there would be significant cuts coming and also spoke of job cuts in the service over the next five years…"
"The report states that Cayman should not introduce any direct taxes, that it privatize and divest government assets, restructure government departments and statutory authorities , cut civil servants salaries and benefits and reduce the head count as well as increase the retirement age to 65.+
I’m really interested to know which points the UK didn’t agree to.
I’m really interested to see what Bush now does regarding the much needed job and expenditure cuts; restructure; salary and benefit reductions and the like. He agreed to these cuts with the UK, but dare he try and agree them with the CS after the shambles that was his last attempt before jetting off to the UK.
And its interesting to see that despite his earlier comment that the UK government insisted we pay our debt back in a year, that they’ve now agreed to the three year repayment term that I believe the PPM were suggesting we try and agree all along (and no, I am not PPM just being objective rather than biased).
sounds like another fudge and smudge excercise now to be spread over 3 years
Interesting, isn’t an increase in duty a tax?
Wasn’t the 3 year plan that of PPM? Just asking as it I have heard comments that they had no solutions. See below link for details.
http://www.compasscayman.com/caycompass/2010/02/25/-No-evidence–PPM-plan-will-work/
Exactly my thoughts!
Thank you UDP.
Thank you God; no taxes!
Jeeze! several lost souls round ya!