PPM asks UK not to tax
(CNS) The opposition has joined the government in calling on the UK not to change the economic model in the Cayman Islands with the introduction of direct taxes. In the wake of the recent letter to the local government fromthe OT director, Colin Roberts, that the UK is still expecting some new revenue raising measures from the Cayman government, the PPM has submitted a position paper to the FCO. The paper indicates that the UK should not undermine the jurisdiction’s financial services sector by forcing taxes on the country, despite the government’s failure to balance this year’s budget.
Although the People’s Progressive Movement has raised a number of concerns about the current government’s economic strategy, the opposition is singing from the same song sheet when it comes to taxation, with the party telling the UK that taxation would rock the pillars of the Cayman Islands economy.
Leader of the Opposition Kurt Tibbetts stated that, at the request of the FCO, he and members of the opposition met the delegation in connection with the current fiscal difficulties last week. Tibbetts described the meeting as frank and useful and said the FCO team of Andrew Paterson, Economic Advisor, Overseas Directorate and Carole Pretorius “were grateful for the insight provided by the opposition.”
Former education minister Alden McLaughlin told CNS that the FCO delegation had asked for the PPM’s input regarding the economic situation, and as a result the party had submitted a position paper.
“We hope this paper have some influence in the UK about not pressing for direct taxation,” McLaughlin said. “The major point is we want the UK to understand that it should not try to alter the fundamentals of the existing economic model. Direct taxation has certainly not helped the major countries so there is no reason to expect it would help Cayman.”
In the paper the PPM says taxation would slow the recovery and harm the country’s economic pillars. “We discern from the Director of the Overseas Territories Directorate’s letter of 12th March, 2010 that the UK is still pushing for us to identify additional sources of revenue and, it appears, for us to adopt some form of direct taxation. We do not agree with additional taxation, particularly in the present environment,” the document says.
Aside from the issue of taxation, the opposition says it hopes the new governor will directly tackle the issue of public spending as the PPM states that, with revenues shrinking as a result of the recession, government spending must shrink equally. The party said it was optimistic that the governor wouldl at last play his part as the person with constitutional responsibility for the civil service.
“The system visualised by the PFML and PSML presupposed that there would be somebody at the top to keep an eye on the civil service, someone who would ensure that the civil service operated in the intended manner. But, until now, no one has done that – neither the Governor, nor the Head of the Civil Service, nor the Financial Secretary,” the PPM states in the paper.
The party also notes that there was no mention in the recent Miller report of who has power over the civil service. “It is also unfortunate that the Miller/Shaw Report does not acknowledge that the elected Government does not have control of the civil service, and that this rests in the hands of the Governor and his appointed delegate,” the PPM told the UK.
The paper sets out the PPM’s concerns over the sale of government assets, the need for proper assessments before any services are privatized or before government enters into private sector partnerships.
The current uncertainty surrounding the economic situation is another issue which the PPM raises, in particular the constantly changing decisions about how government plans to tackle the budget deficit. “We are concerned by the state of uncertainty and ever increasing fear that has been steadily growing since the new government took office,” the PPM said.
“This is undermining confidence in a jurisdiction which is already challenged because of the huge increase in violent crime in recent months. The country is faced regularly with announcements that government will not be able to meet its obligations, then that all is well; that salaries and benefits of public servants will be cut, then the following week that they won’t be, then the next month that they will be; that key government assetswill be sold off, then that they won’t be. This must cease.”
The PPM offers its backing to the proposed three-year plan and says it is optimistic that there is “no more nonsense about getting government finances straightened out within the year,” presuming that, as the FCO requires a three-year plan, it does not expect the budget to be balanced this year and has relaxed the controls over borrowing. “We are pleased but not surprised to hear that the FCO is willing to relax the finance requirements to allow the minimal necessary borrowing while we carry out the plan,” the PPM states.
The opposition team told the UK it believed the government must develop and announce a sensible recovery plan and then the country must be allowed to settle down and work through the challenges presented by the economic conditions the whole world is experiencing.
PPM Position Paper on Government Finances: The Way Forward
Category: Headline News
Do you have any idea how easy it would be to avoid a "Cayman Income Tax"?
Cayman has no ability to see bank accounts in foreign countries, so no ex-pats would ever pay more than a minimal amount.
Only Caymanians with no access to foreign accounts would get stuck paying – what a great plan.
Taxes are no good it will make it too expensive. Just check Bermuda and see that taxes is not good. If we choose taxes we will hurt our financial industry status of 5th in the world and we cannot afford this and to lose business will further hurt Cayman. No taxes! These islands are tax free forever.
http://www.bermuda-online.org/costoflivingguide.htm
All ears Kurt, what’s the magic remedy?
I hope that our leaders will not have to implement taxes and that the UK can help us keep the tax man from coming. As much as we wish this not to happen, I sincerely believe that this is beyond our control.
For one the USA is trying its best to stop its citizens from using tax havens one just have to look at the recent job creation bill passed by president Obama on March 18 which makes it harder for US citizens to avoid taxes by banking in overseas bank accounts. This is going to have a negative effect on our financial industry. Our leaders should read all about this in the HIRE act or the The New York Times.
As for the UK they have their own financial problems, the British Pound is on a steady decline. The world economy is at best in a slump that is why we have to do what is best for our country. We know that it is impossible for us to have our cake and eat it too. We will have to decide what is in our best interest and the least painful to do. Like all Caymanians I would hate "Direct Taxation" therefore we must all come together and make practical suggestions in order to reduce the deficit and find a a reliable continuous source of Revenue. I for one don’t want property tax, but if taxes is the last resort then I will opt for income tax. Bermuda and BVI have income tax and they have and maintain basically the same standard of living and financial industry as these islands.
If direct taxation were introduced into the Cayman Islands what a nightmare would be created.
You cannot get people to pay garbage fees what would you do when people refused to pay their tax?
Would you put people who did not pay in Northward?
Who would review the tax returns?
The laws are barely enforced here now, introducing another set of income tax legislation that would be ignored would be a disaster.
Would there be a mass exodus of expats here for the tax benefits?
Anon 13:06, I think it is past time to still be talking about the PPM & blaming them for all the failures of the UDP government. The UDP’s failure to balance their first budget was far more glaring than the PPM’s failure to do so in their last year as the government. After all the promises by the UDP for a better way forward, & their false projections to balance their budget, it was a GREAT disappointment. THEY FAILED MISERABLY!
You seem to be ok with the UDP not being able to balance their false budget but find it wrong that the PPM were not able to in their last year. Is that hypocritical or what?
The UDP government embarrassingly FAILED to balance the budget after projecting a surplus (how EMBARRASSING), yet they are asking the UK not to tax, so why do you feel it is wrong for the PPM to request the UK not to tax? Typical udp, typical! oooooooooops!
Stupiderer: UDP or PPM?
Actually I think the UDP is worse than the PPM. The PPM are grossly incompetent, but the UDP are actually dangerous (and grossly incompetent).
Caymanian politics is like the "Whack-a-Mole" game where you hit the stuffed animals on the head as they pop up unpredictably out of various holes: every time you identify a Caymanian politician as having done the very stupidest thing you’ve ever seen (and jumped on CNS to "whack them on the head"), another one pops up and does something even more stupid. No matter how many times you whack them on the head, you know they or another like them will pop up and be even stupiderer yet again.
PS – The UK can’t tax Cayman. Cayman can tax Cayman, but not the UK. What the UK can do is refuse to approve/underwrite further borrowing by Cayman, on the basis that Cayman has proven that it cannot run a proper balanced budget. Both parties are saying "We can’t figure out how to make this work. Taxing ourselves is a solution, but the people won’t like it and we won’t get re-elected. Please help us avoid responsibility for this state of affairs." Pathetic. If it were up to me, I’d like the UK to take over and implement direct rule. The local politicians obviously can’t make this government function.
You are right. The UK has done such a great job with its own finances, I hope they can come show Cayman how its done.
a nice statement from the PPM. Sorry no apology yet to the country for the mess Cayman is.
Mr Kurt, remember the statement made many months ago that Cayman was not affected by the recession in other countries. Hope you have gained some knowledge since that statement.
No taxes, No new ways to bring in money, and very little done to stem all the money that has been spent on everything but Caymanians future.
Cayman you are doomed! The best Caymanian minds for hire just can’t cut it in the modern world. Very soon paying the Civil service bill will be a small worry compared to paying off the loan that payed the civil service bill.
Why would the Government actually plan to fail? HHHMMMMMMmmmm!What will be a bad thing for Caymanians will be a great thing for expats. Cheap land, Cheap unskilled labor and anything goes as long as you feed us rules!
"The major point is we want the UK to understand that it should not try to alter the fundamentals of the existing economic model."
But what about the very obvious fact that the existing economic model is broken? What say you about that, Alden McLaughlin? Nothing, right?
"Direct taxation has certainly not helped the major countries so there is no reason to expect it would help Cayman."
In major countries, doesn’t taxation do things like pay for functioning police services, good roads, proper schools and civil service payrolls, all without bankrupting the treasury? I have to say that it appears that taxation has helped the major countries function quite well actually.
I’m not sure what you are trying to say, but it sounds mixed up.
I also liked the term "position paper". That means that they couldn’t figure out how to properly format a business letter, so they wrote on a blank bit of paper the phrase:
"Me no balance bugit, but no tax I please."
Nice contribution to the problem they created.
"Me no balance bugit, but no tax I please."
Yup, I read the "paper" and that’s exactly what is says. Nothing of substance whatsoever.
Thank God the FCO had the sense to know that the Opposition’s input was necessary…..if left to McKeeva it would never happen!
What is the "PPM"? Is this a new political party or something?
It is fine to take the hard stand "no direct taxation". But show the voters and people of Cayman tangible action for reducing CIG costs and new steady income streams for the CIG. We cannot borrow our way out of this. Where is the flip side of "no direct taxation" ?
The flip side is starvation. Stop clinging to the "Wreck of the 10 Sails" fairy tale. Doesn’t the tale go along the lines of Cayman owing no tax to the Crown? That does not equate to no tax collected within Cayman. You get what you pay for and the other guy is getting tighter with his money, so we cannot rely on the other guy’s money to fund our island much longer. If we want government services we have to pay for it. When we realise how much stuff costs us we will certainly hold government to task for waste and overspending. We will all become more economical once we have our own money invested.
The prospect of any income tax in Cayman fills me with dread. However, I am beginning to think that it may not be such a bad idea after all. Although much of government revenue is provided through duties on imported goods, the average person does not see any direct association between the expenditure of the government and their contribution to it. If there were taxes on people’s wages then they could see, on a regular basis, what the implications of high government spending were.
Do you have any idea what type of adminsitration would have to be built around the creation, management, monitor, and enforcement of income tax? It would take hundreds of people at a minimum to try and someone run a "Revenue Cayman" type operation.
Example – if I am lawyer working in Cayman making $500,000.
-> I set up a consulting firm in the BVI in which I am the sole employee.
-> I get a Cayman work permit through my firm with a salary of $75,000.
-> My BVI firm receives a consulting contract for $425,000.
How does Revenue Cayman figure this out or collect the tax on the $425,000?
Also, how would Cayman collect on interest income if the assets are held in a foreign country. In fact, this would probably cause local retail banks to lose a significant amount of assets as local residents moved assets to foreign banks.
Look at the hoops and hurdles that the IRS has put in place to collect U.S. tax – and they have been at it for nearly 100 years.
My guess is that an income tax would cost Cayman more in terms of administration than would ever be collected in revenue. People need to think before they make silly comments in favor of an income or payroll tax.
Lawyer in Cayman making $500,000 set up consulting firm in BVI as sole employee. I have news for you there’s income taxes in BVI and you will pay them.
Don’t compare apples with oranges (USA to Cayman) the oversight and enforcement of income taxes in Cayman will be much easier than in the USA, population size my friend.
Can’t be too hard just look at pension similar system we know the dead beat employers that don’t pay their share and the government will take them to court and let them pay.
Income taxes could never cost Cayman more in terms of cost than collected in revenue. We have lots of foreign staff with accounting degrees in government from tax jurisdictions, these employees are quite capable of setting up our tax system and if not all of the big 5 accounting firms have offices here, problem solved. People need to get their facts right before they make silly statements against income or payroll tax.
Wow – very impressive. You are trying to punch holes in a tax efficient structure that took me 30 seconds to come up with. I’m sure real-life lawyers given million of $$$ at stake wouldn’t be able to come up with a better structure.
Your analysis is wrong anyway, the BVI income tax would not apply in the case that I described above because the lawyer would not actually be residing in the BVI. The consulting company would be the BVI equivalent of a Cayman exempt company.
And don’t tell me that this is not possible because I have seen such structures in use by prospective clients (I politely declined the business, by the way) in both Panama and the BVI.
Even if they were able to collect the tax, my guess is that 50% of professional ex-pats and a good number of Caymanians would say adios upon the imposition of an income tax. What would be the point of working here?
Your tax theory is full of holes like Swiss cheese. Do you believe the BVI’s is being run by a bunch of leaders who are not able to make sound financial decision for their country? again got news for you.
Their Premier Hon. Ralph O’Neal is an Oxford graduate with a degree in financial management and all of their cabinet members are very qualified professionals which by the way includes some very well seasoned local attorneys who are graduates of ivy league universities with several years of international work experience. I suggest you get some information at http://www.bvi.gov.vg/products.asp?iProd=53&iCat=8&hierarchy=0
As for expats and a good number of Caymanians leaving should the government impose income tax, hog wash, where would they go that they don’t have to pay income taxes? I know, USA, UK, Canada, most of Europe, Bahamas, Bermuda, BVI, Monaco, oh let me guess "Mars" where they will find green cheese the colour of money.
What does the education of the BVI premier have to do with anything? That doesn’t change the ability to set up a company there.
Even if it does, you just set up a company in Panama or Vanuato, who cares which jurisdiction you use. BVI was just an off-the-cuff example because it is currently used by onshore taxpayers to shelter income.
If Cayman because just another jurisdiction with an income tax – what would be the advantage of being here. It is not good enough to be the same as everyone else.
I own my own financial consulting company with a handful of employees (including 2 Caymanians), I can assure you that if an income tax was imposed – that it would no longer make any sense to run the company from Cayman. Given all of the hassles, crime worries and expenses of being here, a tax would be the last straw.
Where would I go? Florida makes the most sense. Weather is about the same and cost of living is about 60% of Cayman. If you impose taxes here, there is no point.
No one said that the Premier of BVI having an Oxford education has anything whatsoever to do with opening a company there. The conversation was about INCOME TAXES and it was said that income taxes are paid in the BVI and it did not ruin their financial or tourism industry as a matter of fact they are doing much better than Cayman in both sectors at the moment.
The only reason for his Oxford education being mentioned was to let those tax dodgers and prospectors know that the Premier of the BVI won’t be so easily fooled by their arguements as he is an educated man so they will not be able get away with the foolishness that they do in Cayman instead they will find the next Bermuda.
Please feel free to set up your company in Panama oh the world saw what happend to the financial industry of Panama in the 1980s so don’t dare compare (us) Cayman with Panama. As for Vanuato, I am sure it is such a financial center that it’s so recognized around the world that the average school child can tell you that it is a volcanic island chain in the south west pacific ocean between Fiji and New Caledonia, this is hardly where I think the savy investor would want to incorporate his company then again maybe you would.
Sure, Florida, it seem as if you already have an advantage in Florida because if you are half as savy a business man as you are in your own mind you would know that with the high cost of living and doing business here even without taxes that you could still save yourself 40% of the cost of operating your business in Florida than in Cayman. Just think that in Florida you will have no hassle, no crime worries and practically no expenses, good weather and a 60% reduction on your living expenses. Given all these options if I was in your shoes I would not wait until income taxes I would be smart and take the better option.
Ha, ha, ha, ha, ha. I happened to have a conversation with someone working in BVI this weekend and they told me that all of the ex-pats use the exact structure that I mentioned above to avoid the income tax.
The jurisdiction of choice is Hong Kong.
He said they claim just enough income so that the government leaves them alone, usually around 25-30% of their actual income.
I guess your Oxford boy is either too stupid to figure this out or else allows this happen so as to avoid rocking the boat with BVI ex-pats.
He who laughs last laughs best, ha, ha, ha. There is a old saying that goes ‘Fish Mouth Kill Him"
Advise your friend that change "in law" soon come, because the "BVI Oxford" boy didn’t buy his degree he earned it so he can think for himself. The "BVI Oxford" boy is just as savy at those in Bermuda who don’t give a hoot about rocking the boat with ex-pats and trust me the "BVI Oxford" boy is a chip of the Bermuda block.
So you are encouraging this guy to move his business to Florida?
Nice work – perhaps you can convince Citco and UBS to move the rest of their jobs off island while you are at it.
The guy bragged about all the buisness advantages that he will have in Florida and being the good and honest Caymanian that I am and seeing that he did not come across as such a savy and shap business person I simply gave him advice for free. I don’t want him to be another failure in this country that we will eventually have to pay the price for (remember Matrix??) so before this should happen I wish him well in Florida.
I would not have to convince Citco or UBS to move because I am sure if Cayman was such a liability to them they would have been long gone.
So my friend you point is mute and if you find a better option too I will advise you to take it.
I think you misunderstood the original’s posters comment. He wasn’t saying that he was moving his business to Panama or Vanuatu, those were options for setting up a tax shelter company.
mmm Dubai maybe
and the differences is that if I move to Canada from Cayman when I start to be taxed, then at least I will know I get some benefit of that tax and that 50% of it is not immediately being made to an overstaffed civil service.
and of course no taxation without representation mon!
You are so right Dubai is the perfect place as a matter of fact Dubai earns so much income from oil and gas that it does not need income taxes and is an almost tax-less city. It’s a wonderful country and is waiting with open arm to welcome foreign workers and investors just check out this website. I am sure when you get there you will never leave.
http://www1.voanews.com/english/news/a-13-2009-03-05-voa28-68772492.html
I am sure you moving to Canada or anywhere else will not matter to Cayman one way or another and best wishes. As for your 50% tax benefit I wish you get the entire 100%. The overstaffed civil servants are in their own country not Canada or anywhere else so they should be the people to benefit from their country and government.
No taxation without representation again you are correct, you pay for what you get. Don’t expect to get when you don’t pay that is call begging or stealing mon!
Ummmmmmmm….who is going to pay for the civil service, or anything else for that matter, if people don’t come here to work?
Is your theory that Cayman has a self-sufficient economy? Good luck with that.
The same people that paid for the civil service before you came here expecting to live for free will continue to pay them and by the way if you are wondering who? they are called "Native Caymanians" and they did not immigrate here to work.
My theory that Cayman has a self-sufficient economy, I’ll sit back and let you decide that, but I’ll take my guess that we are a selft-sufficient enough economy that Caymanians can stay in Cayman to work and live while you have to leave your country to come her to live and work. I rest my case. Uh oh…
Poor old Kurt not only does he not know,he has know idea what the question is yes that about sums it up When government ruins the economy our freedom takes the rap.
Just wondering if Ezzard got a chance to meet with these FCO officials
hopefully not
When the Governments, and I say Governments with an "S" had the opportunity to introduce other measures to bring in revenue they would not do it, like for instance a National Lottery. They did not want to be in competition with the church raffle.
Well lets see how much ^&**& Big Mac and Big Kirk have. Not because England is our mother, that she should continue to tell the Cayman people who to sleep with, What I see here is that England and all of is people want to undermine he stability of the Cayman Islands. The people of Cayman is too passive, and should not have given England a dime during the Faukland war.
ASK the British not to do what??!! PPM you help put us where we are today- what do you think was going to happen after you spent like that?? what was your plan?? oh yes…beg the UK not to Tax us!…you are funny.
If the British model of revenue was any better than ours they would not be in the mess they are trying to sell $15Billion worth of government assets and their citizens would not be leaving like rats from a sinking ship because of the taxes.
Cayman, we need to be our own destiny….the UK is only out to destroy Cayman and remove us from the Tax model we have. That has been their 12 year goal ever since “Prosperity and partnership” was systematically unleashed. They removed the stability of the police,(remember Tempura and Bridger) they tried to destabilize the Judiciary(remember Henderson v.Bridger of course) they removed as many financial laws as possible,( can you say tax agreements, 15 and counting) they infiltrated our financial system (allegedly of course for the legal correctness of this post), they led a worldwide press attack against us ( Gordon Brown’s tirades & The Times statements), They sent us an incompetent governor ( or extremely competent depending on what his instructions were) …..I could go on… remember Ballantyne and the MI6 affair? The ongoing CEALT investigation?? and there is likely to be at least one or two more that we do not know of today…logic tells us that is so with this pattern of infiltration and destruction by the UK. Yes, I know the British have said “chaps, absolutely no conspiracy”….why should we believe them after reading the last 600 years of history.
I absolutely do not believe the UK saying this was not a plan ( how could so many incompetent people just happen to descend on us??)….our politicians (PPM, UDP and those before) are to blame for putting us in this situation…imagine begging the UK for something? Boils my Caymanian blood..we should be ashamed of ourselves. We really should sue the UK for allowing us to misspend while they were “responsible for our good governance”. Our founding fathers and early politicians must be turning in their graves. Mr Ormon Panton, please forgive this lot for they know not what they are up against.
To the UK: do not try directtaxation…you will have misread our people for once and maybe the last time.
So what you are saying is, you want Cayman to become independent?
Go ahead, put the vote in. Like to see what state this "Country" will be in, lets say…….10, 5, no how about 2 years time.
Then see if you will be leaving your "sinking ship",
Oh and where will you go? To the other "sunk" ship?
I was always told that it is "better to spend than to steal"!!!
The PPM spent money on necessary projects for the people of this country. Thank God nothing went into their pockets.
I was always told that it is "better to spend than to steal"!!! Oh, I’m sorry, I already said that! Get the message? Guess who really "helped put us where we are today." Only one guess!
The major problem with this country is "Religious Governance”. With the absence of the violence our leader’s logic seems to be on par with Muslim Countries in the east (Our premier leader thinks human rights are a nuisance of a thing). @*%## “I voted for that man”. My only consolation is that there were no better options at the time.
So we are being pressured by the UK to implement new revenue generating measures, or face the imposition of direct taxation. We have the “Miller Report” which is certainly a common sense approach to good fiscal policy (BUT STILL NO NEW REVENUE GENERATING MEASURES). We continue, and continue to miss the point or refuse to abide by the “stern request” of the UK.
So what do we do?
It is obvious that if we implement our new “Miller’s Report” , and casino gaming to follow the tourism model of Bahamas we would have…guess what? A NEW REVENUE GENERATING MEASURE!!! And very likely a large one.
Pardon me…There is another way I did not mention, and this is surely the Cayman Logical Way; “Pray to the sky”.
Silly UK Government- did you not know we had the “power of prayer”? Well, I will have you know this will fixed our crime problems, and this Easter our first monies will fall from the sky…just believe in us a little longer, and Christmas larger sums of will arrive.
Oh, and I will have you know Mr. UK if you don’t stop giving us ultimatums we will leave your house (cha man).
Well as a born Caymanian I have a request for you; If ever these “looney bins” (I mean my government leaders) decide to put speak independence to you. Please give the Caymanians citizens the option to “remain, or become” UK Citizens (this I beg clarity on). As, I would rather suffer your cold grey skies than to be part of Castro 2.