Miller defends report

| 22/03/2010

Cayman Islands News, Grand Cayman headline news, James MillerCayman Islands News, Grand Cayman headline news(CNS): Although James Miller (left) says that he and  David Shaw rejected the idea of direct taxation or other revenue raising measures for Cayman, it does not mean they didn’t examine possible revenue sources closely. Despite comments made by the FCO about the report, Miller told CNS that the idea of tax was rejected because it would not work for Cayman and that overseas territories historically had been allowed autonomy in determining fiscal policy.  He reiterated the report’s findings that the problem was down to spending not revenue.

The man who led the commission said that he and Shaw had looked very carefully at a wide variety of tax measures. “We evaluated each one in terms of revenue raised and the impact on the economy.  In the end, we decided to recommend against new revenue measures,” Miller explained, adding that such measures would not likely raise much money, would harm the Cayman economy, and that it was apparent that the sustainability problem was caused by overspending, not a lack of revenue. 

Miller said that the UK had not advocated a specific new tax or additionalrevenue source and the commission covered all realistic proposals for new revenue, including all that the Foreign and Commonwealth Office (FCO) might have advocated, had they done so.  “It is wrong to assume that simply because we rejected an option we didn’t consider it,” he added.

Although Miller has received considerable support in Cayman from the private sector, the UK has expressed its concerns that the commission rejected new sources of revenue, in particular some form of direct taxation.

In his letter to the premier earlier this month following the talks in London with the Cayman Islands government and the FCO, Colin Roberts (above right), the overseas territories director, indicated that the UK was still expecting some new form of sustainable revenue raising measures. He said the UK Minister with responsibility for BOTs would “be surprised if new measures are not brought forward” to raise revenue as part of the three-year plan to improve the government’s fiscal situation.

“It is disappointing that the Miller commission did not provide a robust, quantified assessment of such measures,” Roberts wrote to McKeeva Bush. While the UK says it agrees that spending needs to be reduced, the FCO seems not to see this as an ‘either or solution’ but has asked to see the CIG address both sides of the budget.

Miller is, however, insistent in his report that the problems is entirely down to overspending, hence the need for the CIG to take drastic measures. Aware of the social implications of reducing the civil services, Miller explained to CNS that he believes the civil service is an "employer of last resort", and with improvements to the economy more jobs could be created in the private sector.

“By getting back on track and enabling certain private-sector initiatives, government could enhance economic growth and create substantial employment opportunities for Caymanians,” Miller added. “Governments that over-employ are behaving unfairly to those who do not have government jobs and who, one way or another, pay the bills.  Also, a government that over-employs crowds out the private sector by bidding up the price of labour unnecessarily.  It is difficult to start a new business when you are competing for staff with your own government.”

He urged Caymanians to recognize that there are “no free lunches and unnecessary expenditure” in the public arena and it has a price of lost opportunity and work in the private sector.  

Miller said he believed civil servants could transition to the private sector during the process of divestment and privatization of services. He acknowledged that once in private hands there would be a greater demand for labour force productivity and better sales, and while the first would reduce the need for employees, second would increase the demand.

Confronting the fears raised that reducing civil service pay and the numbers employed would have a direct impact on the economy because of their buying power, he said any problem in this regard would be short lived. “In the longer term the private sector should grow again, and civil servants should benefit from any increases in government revenues, while all Caymanians would benefit from increased fiscal sustainability," Miller suggested. “The Cayman Government’s fiscal problems are the result of a rate of growth in spending that vastly exceeds the rate of growth in the private sector.”

Responding to the Civil Service Association’s suggestion that public servants take time off in lieu of a pay cut, Miller said this proved his point. “This suggestion seems to confirm that there is substantial over-employment and that all the activities of government could be carried out with fewer people.  If we understand the proposal correctly, it would mean higher incomes for those retiring civil servants on defined-benefit plans.  It is important for those civil servants to focus on the unfunded liabilities of their retirement plans and recognize that these income ‘promises’ are unsustainable as well,” he warned.

Reviewing the commission’s work, Miller said he and Shaw were appointed because of concerns about the jurisdiction’s fiscal sustainability, and he said they found those concerns were justified.

“The Cayman Islands Government has an opportunity to put its business in order and enhance economic growth, thus improving the standard of living of all Caymanians.  If it fails to seize this opportunity generations to come will pay the price,” Miller stated.

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  1. Anonymous says:

    “We evaluated each one in terms of revenue raised and the impact on the economy.  In the end, we decided to recommend against new revenue measures.”

    It would be interesting to see their data and the methodology used to reached their conclusions.  I do not think that is an unreasonable request after what they were paid.  I feel most of use are against direct taxation and it would be reassuring to have the facts not just the statement of their opinion.  After the amount of the peoples money spent we deserve all the facts.

    • slowpoke says:

      Economics is not an exact science, so when you are presented with an "academic" report, in which every single citation supports your conclusions, some red flags should go up.  If something is so well established and has a perfect correlation of 1.0, what is the purpose of the paper?

      It is also not academically appropriate to state “yes we did a bunch more analyses and stats, but chose not to report them”.  It would considerably strengthen their conclusions, if the other data were available for independent review.

      Of course, whoever hired Miller III, wanted a “hired gun” to deliver this specific message.  So this argument is a non-starter.

  2. Anonymous says:

    Anyone with half a brain and common sense and who actually read the report can easily see that the report simply concludes exactly what the group who commissioned it wants it to conclude. Their minds were set on no direct taxes and cutting the Civil Service and by golly the Miller report miraculously comes to this conclusion but yet fails then to recommend any revenue earning measures worth investigating, instead the main focus appears to be cut expenditure and while that is certainly a part of the solution, to eventually balance the budget you MUST have both increased revenues and less expenditure! There is only so much they can cut!

  3. Anonymous says:

    The man, son and his doney… On a lighter note….

    Once upon a time there was a man and his son going to town to sell their donkey…. along came everyone making suggestion on how best to take the donkey to town, they tied to please every one and eventually lost the donkey.

    The moral of the story is….  it’s best to do what you know is right because it is impossible to please every one and if you try to you will only lose what you have.

    Cayman was doing just find, until our leaders began to listen to and try to please every outsider that with an idea and we all know where this will lead us.  The road to hell is paved with good intentions.

  4. Anonymous says:

    instead of using the recent developments and the Miller report positively to open our eyes and respond appropriately, i note from the comments written above, we are just blaming each other or trying to find a scapegoat.

    Let us act mature and do the needfull  to right this ship collectively as a nation.

    Cayman, with no majornatural resources , became a force in the financial industry with this grit and a positive  spirit . I am sure we can do it again as we sail through this dangerous waters.

  5. Anonymouse says:

    Clearly this Mr. Miller has no grasp on local economics. He recommends cutting civil service pay – that means less spending going in to the local economy. He recommends civil servants get fired; ignoring the short term hardship as he does; then be rehired by the private sector, a private sector known to avoid hiring ’employees of last resort’ – that means less spending going in to the local economy. It also means more coming out of Social Services. Whereas before people were living on government pay now they’ll be living on government dole. Brilliant.


    What will happen is the young, educated, civil servants will take the pay cut and bide their time, waiting the jobs they want here or abroad are again hiring, then leave, brain-draining the service. This will happen first in professions like nursing and teaching where there is a large short-contract expatriate proportion who are easily mobile, just like all the private businesses we keep hearing we must bend over backwards for lest they leave. (The Caymanians and long-term foreign workers will take a little longer to wrap up their affairs and leave, but it will happen.)  What happens when you go to the hospital and government has cut its ‘service’ by default by not paying the staff there enough to retain them all? Longer wait times and less skilled carers. Also, ones that care less. (And don’t even ask what happens when you can’t attract enough garbage men, we’ve all seen that.)


    The problem with right-wing-accountants like Mr. Miller is that they don’t care about treating workers fairly. Less pay (which he recommends) can be made more palatable by less work, like a few days unpaid leave. However, in his style of employment you are expected to work more, for less, and say "thank you". I suspect the answer, over time, will be very different.

    • Common Sense says:

       Very good points.  I agree that the private sector will NOT absorb civil servants if the number of govt employees are cut and that a "brain-drain" will happen as the seasoned civil servants who are GOOD will go and the average and lazy will remain.  The only way to cut the spending is to cut salaries within reason, make the civil servants contribute to their own health care and pensions and payless paydays…like citibank and the city of Detroit….more days off (come on, we all know that sick days are already considered an extra 10 holidays a year!)…sorry, it is either that are FIRE 20% of civil servants across the board in a sad lottery.

  6. Anonymous says:

     Let me get this straight, our near-broke government paid some right wing retirees $300,000 to tell us thatour government spends to much money? 

    Are you serious? 

  7. Wheelover says:

    Miller may have been commissioned by Bigboy but just who was the real person suggesting Miller. My source says not Travers. As usual it is wheels within wheels, vested interests etc.

    • Anonymous says:

      In a lot of ways it must be very easy for Mac lets face it he doesnt have any decisions to make other than where he wants to go on his next jolly 

      All he needs to do is stand up and read what the likes of Travers etc want him to say . Isnt it about time this charade was stopped  it is clear jobs need to go , salaries cut and it needs to happen now .

    • Anonymous says:

      so who has been liasing with lobbyists lately – wasnt it Cayman Finance ?  

  8. Anonymous says:


    In your personal finances, when you are spending beyond your means and over extended on your credit, what do you do to fix it?

    You cut back and STOP spending.

    When there are no temperate options to increase revenue, you cut back and STOP spending.

    Or, you can steal/rob from others. If you steal/rob from your employer, this is called embezzlement and is the popular way in Cayman to increase personal revenue.

    But if you are the government and cutting back makes you unpopular and this concerns you aboutthe next election, you increase costs to the people to fatten the coffers so that you can continue spending and not cut back. Kind of like robbing, but they tell you about it first.

  9. Anonymous says:

    As a fellow BTer, I agree wholeheartedly.

  10. Twyla Vargas says:

    PAY THE PRICE.  Absolutely correct…………  These words, are very wise words of wisdom,  for all Camanians,and I do  agree with every word,  and warning expressed by  Mr Miller.   He is a very wise man  with an  "All seeing eye"   All comments should get and "Amen"    especially the  comments that "Governments that over employ, are behaving unfairly to those wo do not have Government jobs, and who, one way or the other pay the bills.  So very true.   This country or Island, what ever we may want to call it, used to run much better when we had only one or two MLA,s in each district.    Now we have more than we an afford collecting a big salary.,  and can anyone step up to the mike and say "HELLO" this is what I am doing for my salary?  We do not need all of them. 

  11. what a mess says:

    This report seems skewed in favour of the rich!

    What of those who have known and used "the system" to generate their tax free wealth over the past 3-4 decades… many of whom are also on Govt. pensions now (past politicians)…what will be their share of cuts?

    Miller/Shaw report says ‘they looked at and dont feel direct taxes are right for Cayman" but the UK FCO is saying where is "the quantitative evidence"?

    We must remember MIller/Shaw (and Jefferson) were commissioned (hand picked) by Mac. And also that to apply a fair tax system will include the rich paying their fair share…to simply "cut" Govt. expenditure will not directly hurt the rich and powerful (including politicians) as they will find creative "fees" or "expensives" or other "perks" and the like to offset the difference…while the middle class and the poor will be left to struggle once again.

    I’ll be the first to agree that Govt. needs to reduce it’s numbers…and that some posts are overpaid…that govt. is Top Heavy with too many at upper management level…but i also agree with the FCO in that is only one side of the equation…and that for Cayman to sustain itself we will have to look at the revenue side also…especially for the rich (we know who some of  these people are) to make a fair contribution.


    • Anonymous says:

       handpicked by mac  ??  that i think is a very naive statement – Mac I believe is being controlled by the likes of Tony Travers and his buddies . 

      • what a mess says:

        Wheather is was Mac or Travers is hardly the point…that being; the system suggested by the report is biased to protect the rich and cause more hardship/cost to the middle class and poor!


      • Anonymous says:

        Hilarious comment.  If Travers was doing the talking and ‘controlling’ Bush, there’s no way Bush would have been able to go on his 9 month spending spree to various different countries, Travis wouldn’t condone that.  Jeezus, Travis has done so much in a positive way for this country (which is more than I can say of the politicians) it really amazes me when people come up with such dumb statements.  I actually really wish Travis was pulling Mac’s strings.  At least we’d be making some progress towards addressing the country’s spiralling debts, etc.

  12. Anonymous says:

    It was surprisingly beautiful to see a tall stately English Policeman walking the streets of Bodden Town on saturday, and meeting the residents who welcomed his presence. This was lackened for a long time. We need to know our officers and not to have fear of them, that way people will trust them to tell them anything. We hope that this wont be the first and last day of his walking the Bodden Town Street. Thats the kind of Police that we used to be accustomed to years ago when Cayman was a Paradise.Whoever idea thank you. I even heard that he was in the bar and restaurant in East End on Saturday thats the way to go Sir. We need to get our Communitys back and make friends rather than have war.

    • Twyla Vargas says:

      11:2 7    I have  to back you up on this one too.  Tall, handsome, English Police,strutting the streets of Bodden Town, knocking on doors and communicating with  the have,s, and have not.   It was a very plesant surprise, which was welcomed by many.   Communication is the key in any reationship, even the police.  If they do not take a five minutes from behind the desk and stretch their legs a mile or two, they will never know what time the town was painted red.

    • Anonymous says:

      Who is this tall, stately, handsome English Policeman strutting the streets of Bodden Town… lucky ladies…is he single:)  Can we have one in GT too????