False hope in UK election?
There is a "false hope" in the air that if the Conservative Party wins, the Foreign and Commonwealth Office will not pressure us like it did before about "sustainable revenue" or taxation. When the Labor Party with Gordon Brown was in active power and unemployment rose in the United Kingdom, large business owners, corporations, and wealthy elites, evading taxes to places like the Cayman Islands (a new scapegoat), became a major issue.
It was claimed that much of their tax monies was supposed to be going to social programs to help the low-wagers and unemployed, but that was not the case. The allegations: "they" were evading government taxation and putting their monies safe away into the offshores financial centers. It seems that the Labor Party’s aim was all about getting at the so-call "tax havens" to replenish the UK’s economy.
Such things appeared not to be on our side: the OECD and their stance on banking and financial transparency in the Cayman Islands; President Barak Obama and his negative view on tax evaders and the Cayman Islands; the United States’ Democrats and UK’s Labor Party, teaming up to confront the tax evasion issue and pressured by their ailing economies.
And last year, just after the ratification of their new constitution, evidence of corruption in the Turks and Caicos’ government became the premise for the FCO and appointed Governor to seize the Islands’ finances, dissolve their cabinet, and declare full British Rule over the Islanders without their democratic consent. The move was condemned by many members in the United Nations. But this was done to curb the corruption in the Islands – so they said. Most definitely, many UK investors returned to the UK.
But no worries … is what I am hearing from people here!
Apparently, the Conservative Party (the new hero!) is on the side of much of the large business owners, corporations, and the wealthy elite of the United Kingdom. And by them winning this election, these same businesses and elites will be able to secure their monies in the offshore places without any hindrance. "Conservatives are about making money and protecting large businesses! They will want what we want! They will want to protect the offshore centers. The next appointed FCO Minister will be on our side." I wouldn’t be so sure about that! Regardless of which party was in power, read your history books, the FCO have always had their own way over the Overseas Territories.
It will be interesting and non-surprising to see if they will still refuse to let the Chagossian people return to their home island after 40 years of being evicted so that their Island, Deigo Garcia, can be used as a US/UK military base. Recently, the FCO under Brown’s government has declared the Chagos Islands protected – no fishing allowed. Hence, even if the Chagossians were allowed to return back to their home island, they would have no authorization from the UK to start their own fishing industry. It seems English justice still sleeps!
We will just have to see, time will tell …
But as far as I know, we should not become too relaxed entertaining false hopes.
If Labor wins – the same old thing! If the Tories wins – you’re in for a surprise!
Category: Viewpoint
Fact: the Cayman Government is spending more money than it brings in.
Fact:The Cayman Government does not have the ability to cut its spending habits.
Fact: There is no logical way to get more money out of the people that live and work on Cayman without loseing them.
Fact; There is no logical way to get more money out of the financial industry without loseing it.
Fact: If the UK lets Cayman borrow even more money that it can not pay back then Cayman fails later and the UK gets the blame.
Fact: If the UK doesn’t let Cayman borrow more money then Cayman fails sooner and UK gets the blame.
Conclusion: the Cayman Government will fail both financially and in its ability to take responsibility for its own actions/inactions period!
lol… no one is contesting that except you and OReally
O’Really
Cayman Finance had their summit at the Ritz Carlton today. See News 27 – Cayman Finance Summit: Tax or No Tax http://www.cayman27.com.ky/
And the international speakers advised Cayman not to succumb to pressure and introduce direct tax in the Cayman Islands… And hear you now talking junk like the UK is not pressuring our politicians.
Just outright ignorance! They want us to tax – they have verbally declared what they want for us!
Please spare us as if we should feel sorry for the innocent FCO
We agree onone thing – one of us is ignorant.
Good commentary… and I hope many others open their eyes and see truth from fiction
BE careful Mathew dear because we have some serious colonialist passive/aggressive thugs who live amongst us who are well funded and connected who would view your little piece as heresy and may very well burn you at stake for speaking the real truth. These are the seem folks who love to blame or so called political leadership for our failings when they well know government policy and direction for this OT is controlled by the FCO and the UK the same folks who sinister sarcastic manner is so thick it leaves a salty rusty taste in our minds. Yes Mathew and our past political leadership are some of these very people and our current one seeks to curry favor with these same forces to the detriment of the Caymanian people. As for False hope that appears to be the only thing we have left. It is said that our ability to delude ourselves may be an important survival tool and apparently so is ignorance. So many opportunities have been missed to set us on good footing only to be squandered by our seditious masters and their slaves. You right about one thing that is the air of uncertainty hanging over the island and our political leadership waiting on political change to increase debt is truly ignorant.
I have rarely lived in an Overseas Territory and it’s interesting to note the dynamics some good, some bad, some ugly. Aside from that, without simplifying it too much it appears Cayman has been used as a piggy-bank for certain interests. This was fine for awhile but now that things are financially tight in the U.S.,U.K., it’s time to break the piggy-bank to see what’s inside, and I think they’ll be surprised to find CIG doesn’t know either.
To break the piggy bank is interfering with people’s private information. The OECD need to learn what respecting people’s personal accounts is about! And the UK and US need to learn to handle their own economies before picking or casting blame on the outside countries.
Whoever takes power in the UK it won’t solve Cayman’s structural financial problem of burgeoning and seemingly unregulated state expenditure..
It won’t stop the moves underway in the USA to repatriate overseas earnings either, moves that could eliminate the "offshore advantage" for US companies and high net worth individuals and further depress the Cayman economy as they withdraw.
But, if worrying about the result of UK elections rather than worrying about the real economic and political factors driving Cayman’s destiny, allows people to sleep sounder at the wheel so be it.
Are Caymanians ever going to accept responsibility for their actions? Not according to your article.
I’ve written this before, but I’ll do so again for your benefit. Your government only has to seek prior approval from the UK for additional borrowings because Caymanian MLA’s passed a piece of Caymanian legislation ( thePFML) which set certain limits to borrowing that could only be breached with UK permission. Caymanian MLA’s then presided over an ongoing expansion of the Civil Service to it’s current bloated and unsustainable level and a capital expenditure program far too ambitious to be sustained by anything other than optimum revenue flows, without thought to how long such optimum flows may be sustainable. Is any of this the UK’s fault?
In the simplest possible terms, Caymanian MLA’s allowed Cayman to spend more than it earns. When this happens, there are 2 broad solutions.
1) reduce spending. BigMac has clearly shown he doesn’t have the political will to reduce spending. Is this the UK’s fault?
2) increase revenue. BigMac has now learnt that you cannot conjure up external revenue sources simply because that would be helpful. Is this the UK’s fault?
BigMac needs to borrow. He probably expected the UK to simply rubber stamp the application and ignore the duty imposed upon them by Caymanian law, because that’s what he would have done, but the UK quite rightly asks him how he is going to repay new and existing debt obligations without either trimming expenses or increasing revenue. He clearly doesn’t have an answer, or we wouldn’t be discussing this.
The UK has suggested that if the political will to reduce government expenses does not exist and given that external sources of revenue cannot be created over night, any new revenue sources required to service increased debt must be internally generated, ie a tax of some description. As far as I am aware, the UK has not forced anything down Cayman’s throat. This is actually the job of Cayman’s political leaders but they don’t have the balls to do what has to be done. Is this UK’s fault?
My objective in posting this is not to defend the UK against posts such as yours but to show that while all of the finger pointing at the UK plays well to Caymanian’s natural prejudices, it serves only to disguise the real problem. Caymanian MLA’s and their overwhelming concern with protecting their careers and future electability are the problem, not the UK.
Whether there is a change of government in the UK or not, I fail to see how the UK’s obligation to approve Cayman’s borrowing requirements will change. To this end I actually agree with the warning you have issued, but not with the blinkered thinking that gets you there.
good point O’Really about our own responsibility, but you seem to close your eyes to the blinkered reality that we are under the british – they are not under us! They still have their own interests to look at
I am Caymanian and I agree that most of the local budgetary problems are of purely local making. I agree that our politicians currently seem to be entirely self-interested and short-sighted and I am disappointed that the government has so far failed to step up to reduce expenditure and balance its budget.
However natural prejudices and blinkered vision are not restricted to the people of theCayman Islands as a couple of your points may possibly illustrate.
the UK’s obligation to approve Cayman’s borrowing requirements
The UK is not an unbiased enforcer of Cayman Islands law and there is no part of any law passed by the Legislative Assembly of the Cayman Islands which the UK is legally obliged to enforce contrary to its own interests. As a matter of fact the UKs Colonial Laws Validity Act expressly allows the UK to legislate for the Overseas Territories even when such legislation is abhorrent to all principles of natural justice.
Anyone who remembers the activities of the UK’s operatives in relation to Eurobank will recall that the UK simply ignores Cayman law whenever it wishes. It also ignores its obligations under international law whenever it is convenient to do so. Where there is a conflict between the interests of the people of the Cayman Islands and the political interests of the government of the United Kingdom, the UK government’s position in relation to issues relating to the Overseas Territories is that the interests of the UK trump any obligation to the peoples of the Overseas Territories. That is the position of the UK which was clearly and recently articulated in the Bancoult case.
That being said, UK policy in relation to its Overseas Territories is undoubted subject to political influence as such policy always reflects the self-interest of the UK politicians who happen to have poltical control in the UK at any given point in time. I am not suggesting that any new minister responsible for the OTs will ignore fiscal prudence, but differences in the latitude which may be afforded by a new UK government just may be worth exploring as part of a Cayman Islands generated solution to the current problems..
Man, you nearly had it! Your first paragraph reads as if you, at least, are prepared to recognise where responsibility lies.
But then you go and spoil it in your last three paragraphs by seeking to muddy the waters. You don’t quite know how, you don’t have any examples relevant to the topic under discussion, but you’re sure the UK has got to be responsible somehow, in some shape or form for ….. what exactly? Having the upper hand politically in a relationship where this has always been so? Allowing sufficient internal autonomy for Cayman that it’s politicians have the right to mess up big time? Allowing Cayman to frame it’s constitution and bill of rights to reflect Cayman’s culture, particularly with respect to sexual discrimination, even though it flies in the face of modern social thinking in the UK? Expecting Caymanian politicians to follow the word and spirit of their own laws?
Ah, now I see it. Wicked, wicked UK!
O’Really – you don’t get it at all. The last three paragraphs were a seemingly futile attempt to hold up a mirror so that you could see the prisms affecting your views of the UK’s role in relation to Cayman.
My examples did not suggest that the UK government’s actions are "wicked". (If anything the UK’s positions on its Overseas Territories are completely amoral.) I merely pointed out with examples that your assertion relating to the non-existent legal obligation falling on the UK in relation to Cayman’s budgetary ratios was unmitigated rubbish.
Believe it or not I understand your point and I have consigned it to the correct but irrelevant bin. The UK could chose not to perform as required by the PMFL, but it has performed so far and gives every indication it is willing to going forward.
Was the approval sought by the CI government and granted by the FCO for the November 2009 $312m bond issue unmitigated rubbish?
Or would it be unmitigated rubbish if I were to point out that the government is waiting for the UK elections to be resolved before they can seek approval for further borrowings from the FCO?
Try living in the real world with the rest of us. You seem to have a reasonable degree of legal knowledge but little common sense.
The people have spoken.
This is Cayman. Don’t they always shoot the messenger?
As usual OReally feels the urge to rush to tthe defence of the UK. I don’t see that the aticle had anything to do with the obvious need for Cayman to address its budgetary issues, nor was it blaming the UK for that failure. That is a red herring in the context of the article.
However, Matthew, please understand that the issue of tax evasion (defrauding the revenue authorities by failing to declare or making false declarations of taxable income, assets etc.) is quite different from tax avoidance (legally arranging our affairs so as to minimize our tax burden). All sensible and well-informed people practise the latter and this is what Cayman offers. The problem is that the OECD countries do not recognize our right to exist for this latter purpose and are hell bent to destroy the Cayman Islands (and others) for this reason. This could mean the end of our financial industry which would leave us with less than 1/2 of our current GDP, a massive debt and less than 1/2 of the population (Caymanians) to pay it.
I didn’t suggest the article was blaming the UK for the problems Cayman faces, my suggesting is that it blames the UK for the unpalatable options available as solutions and that this is done deliberately by politicians and gullible posters to divert attention away from those who have real responsibility for both the mess we’re in and implementing solutions.
"There is a "false hope" in the air that if the Conservative Party wins, the Foreign and Commonwealth Office will not pressure us like it did before about "sustainable revenue" or taxation."
"If Labor wins – the same old thing! If the Tories wins – you’re in for a surprise!"
The premise underlying this article is clear from these these 2 quotes, which is that the Labour government, in seeking to hold Cayman to the terms set out in it’s own legislation ( the PFML ) by not rubber stamping proposals put forward and requiring Cayman to come up with solutions that are not, for once, smoke and mirrors, is somehow the bad guy. Even though the only solutions to Cayman’s financial problems are broadly to cut government expenses or increase revenue streams over which they have control, ie taxes, when this is pointed out by the UK, it somehow becomes the UK "pressurising" Cayman.
From the implied assertion that the Labour government is the bogey man comes the warning that the Conservatives may well be too.
The red herring is not my post but the suggestion that any UK political party is responsible for the options available to Cayman.
If the Labour government were as determined to destroy Cayman for reasons of political philosophy or economic jealousy as many like to suggest ( see any poster ranting on about the Chagos Islands on this subject ), they could have started the process by refusing to authorise the $312m bond issue in November of last year or at least playing very tough on taxation and spending cuts. They could have thrown the political stability of the islands into disarray by insisting that the breaches of the election law in BT be addressed through by-elections.
I am inclined to assess situations based on what is done, not what is said. In November the UK performed by approving necessary borrowing; it did so if my memory serves me correctly based on various proposals BigMac had for addressing Cayman’s problems, significant amongst them being cuts in Civil Service expenses of around $95m. BigMac delivered I think $5m. Is this performing and how much would you rely on the word of someone unprepared to accept his responsibilities next time you have to deal with them?
My post seeks to make it clear that responsibility for Cayman’s financial problems lies with Cayman’s politicians, compounded I would admit by a global crisis beyond their ability to influence. More importantly though, the solutions lie with Cayman’s politicians, but they have to date conspicuously failed to perform. I don’t doubt that the mindset in government is to keep their heads down, hope things get better and ride out the storm. Good luck to us all on that basis, but if this doesn’t work out, BigMac will eventually have to cut spending or increase taxes, not because the UK says so, but because real world economics dictates that these are the only options available.
When Caymanian’s face what seems to be some form of unpalatable revenue or cost cutting measure, don’t let your politicians shift the blame. Hold their feet to the fire. They got us here, not the UK; remember that come the next election.
OK. I understand the point you are making and we agree.