On the importance of continuous education
A recent editorial in the Cayman Net News described the Cayman Finance conference on May 6th as “doing lunch, or in this case, holding a conference” suggesting it was an inadequate response to the adverse economic situation faced by Cayman. A comment such as this is plain silly.
As does the media, Cayman Finance has a mandate to provide information and a forum for debate. But perhaps the biggest challenge of all is to change misperceptions about the role that Cayman plays in the international economic arena – a misperception largely created by the media.
One of the major hurdles faced by Cayman’s financial services industry (and by continuation, the Cayman economy as a whole) is that people had begun to believe the rhetoric of the international media and the repeated allegations that a low-tax model such as Cayman’s works to the detriment of the poorest members of the global economy. It is easy to say that Cayman “siphons off tax revenue” without also explaining how the Cayman model benefits global economic flows – those same flows that fund projects that employ people, feed people, create wealth for retirement and provide solutions, for example clean energy production.
On May 6th at the Ritz Carlton the most impressive group of speakers assembled in this Island will be presenting the other side of the economic story and driving a stake through the heart of the fallacy. At Cayman Finance we do not believethat there exists a moral obligation to pay increasingly higher taxes with no accountability on the government’s behalf. Statistics prove time and again that when taxes are reduced, economies thrive and the people who live in them are wealthier overall.
One of the major objectives of Cayman Finance for 2010 is to educate the Cayman public on the importance that financial services play in the local economy and by extension how our model actually benefits G-20 countries. We say that legitimate tax competition creates government accountability. The Cayman Finance Summit has been put together to provide an intelligent insight from people who will establish that countries with lower taxes have citizens who are better off overall and how this model contributes significantly to the advancement of the global economy.
In the same spirit of sharing information and educating the public, Stuarts Attorneys-at-Law and RBC Wealth Management teamed up earlier this week to sponsor a very informative talk by two leading commentators, Dr. Andrew Morriss, Professor of Law and Business at the University of Illinois and Dr. Christopher Culp, Adjunct Professor of Finance at the University of Chicago, Booth School of Business. These presentations were as enlightening as they were sobering, providing detailed accounts of the dire financial positions of the United States (and particularly the individual States themselves) and how these positions may ultimately affect the Cayman Islands.
The essence of the conversation boiled down to two key points. The Cayman Government need not feel the shame of being alone holding a bag of debt and current liabilities without the revenue streams to pay for them. Dr. Morriss showed a statistics from states such as California, Illinois and Arizona that should definitely make the statesmen blush and would make anyone choose Cayman’s problems over theirs. The problems of our northern neighbour are in part similar to ours: over-extended and drastically underfunded public pension schemes, antiquated revenue systems that do not reflect the basic platforms that state economies are run on, an oversized civil service paid wages at significantly higher rates than could be earned in the private sector, and little or no transparency in the public accounts. The US states have all of these problems plus a crippling tax burden on individuals and companies as well. It might start to dawn on some that it does not matter how much revenue is raised by governments through taxes, the rate of taxation will always be dictated by the level of government expenditure.
The one area where Cayman does appear to be trumping the US (both federally and at the state level) is communication – at least the Cayman government is talking about the situation and is engaging with stakeholders to investigate solutions. This is evidenced by the commissioning of The Miller Report and we await the implementation of the clear strategy outlined within it to be implemented with due haste.
I encourage all members of the public to attend the Cayman Finance Summit being held on 6 May 2010. Cayman has been belittled in the international media for such a long time, unfortunately some are beginning to believe that what is being said is true – that we need to conform to the ways of the countries such as the US and the UK.
The irony is that they are in a worse financial situation than we are. As Dr. Morriss stated in his presentation, the Budget Director for one US state said that part of his budget plan was hoping that the some of the companies the state owed money to would go out of business, so debts would not have to be paid. Can someone please explain that moral position?
Denise Gower is head of marketing at Cayman Finance
Category: Viewpoint
Since we have such an illustrious group of financial industry experts coming here, I would like to suggest a few more topics for them to address:
1.Ethical Behaviour: Why it is not in the public’s best interest.
2.Responsibility and Remorse: Overrated and unnecessary concepts in the financial industry.
3.Self-Centeredness and Greed: Key personality traits for a successful career in banking.
pitiful – instead of focusing on the problems facing the cayman islands, you have to bring in the US and UK into your argument…wink, wink, nudge, nudge "you think we’re doing poorly, just look at those 2 hypocrites, the US and UK"…
Dear Ms. Gower,
Thank you for your little infomercial (I trust you paid CNS handsomely for it, (if not, you should have)).
I also look forward to attendingyour “forum for debate”, as you have invited so many speakers with differing and divergent view points.
The “debate”, I am sure, will undoubtedly convince me that Lehman, CITI, AIG, Enron, etc. and now Goldman, Merrill… and our local suppliers, were just victims. If only we would have less regulation and government…
BTW, thanks for toasting my pension plan.
What you are saying Mr. Gower is that taxes don’t help and they are simply a burden placed on people so that governments can continue wasteful spending? That’s blasphemy.
We have many things spun at us. And one of the largest spins, is that taxes create wealth. It’s a hard spin. Looking at what taxes really pay for is much closer to the truth.
In the U.S., taxes pay for social programs such as Social Security and Medicare. Surprisingly enough, these have already been deducted from wages. The next largest expenditure taxes are used for is the military budget and continuous wars. And the Pentagon itself admits they are missing some three billion dollars, which I presume will be found somewhere. If not, taxes will be need to be increased to make up for this loss. As they always are, but by far the largest use of taxes is servicing the national debt which is now running at some seven trillion dollars.
As you are saying, it does not instill much confidence, especially at tax time. But the spin is stillthere. And the promise is still made. That…given a few more tax dollars….and a little more time…eventually people will see the benefits. Even though those benefits are being reduced, decimated, and made redundant by continuing government wastefulness.
The other spin.
Is that by reducing taxes, especially for corporations and the wealthy the wealth saved and generated will trickle down throughout the economy.
As an investor-tax payer I’m not convinced either is correct, because for one thing I have not seen any evidence of a trickle.
And I will also be open-minded about what the Chicago School of Economics has to offer to alleviate this global problem for working people and the working poor. Because as you may know, Alan Greenspan has been dreadfully wrong in all of his predictions.
But perhaps their attitude has changed, and it would obviously be of benefit to everyone if there were a correlation between what is good for the financial industry was also good for people.
I will be attending to hear what the finance industry has to say about these things. Thank you for the invitation.
Joe
In a way he is right – IF and only IF the imposition of taxes is by a Government that doesn’t represent the people and their needs like social programs. Such taxes are a burden placed on people. I hope the UK don’t tax us, because first of all they represent their own interest; they don’t DIRECTLY represent us.
IF taxes are used to help directly build the country and is totally for the people and those in need, then I agree with you. Such tax will create wealth and help many people.
The problem we see in the world now is that taxes are being used by politicians for corrupt reason and selfish accumulation of wealth for themselves. If Cayman starts to tax, where will the monies go? Food for thought.
The British government is under an obligation to run Cayman in Britain’s interests even if that is contrary to local regional interests. And so it should be given the lack of true democracy in Cayman.
Ms Gower?
I am all for the members of Cayman Finance, or whatever it is called this week, spending their money on Island. However, the writer might wish to learn the distiction between education and indoctrination. By way of education:
Indoctrinate: To imbue with apartisan or ideological point of view.
See the difference?