Cayman tax sytem unfair, says local recruiter

| 01/11/2010

(CNS): During a panel discussion organised by Generation Now a local recruiter pointed out that indirect taxation is unfair on the poorer members of society. In the second of its public forums on controversial topics, the critical thinkers brought together Paul Byles, Anthony Travers, Tom McCallum and Steve McIntosh to discuss the country’s tax system. While Travers, the chair of Cayman Finance, argued that direct taxes would drive away business and economist Byles said they would be too difficult to collect in a mobile population, McCallum of McCallum Consulting said jurisdictions such as Jersey were thriving on direct taxes and recruitment expert McIntosh pointed out that indirect taxes were regressive and created a disconnect between the voters and government accountability.

Aside from being unfair to those at the bottom of the socio-economic pile, since indirect tax systems mean they pay a greater proportion of their earnings to the government coffers, McIntosh, the CEO of CML Offshore recruitment, pointed out that people don’t realise how much tax they pay when they are indirect. “Indirect taxes are regressive and unfair; people on low incomes pay proportionately more than those on higher incomes,” he said. He also wondered whether government would still be building a $9 million hurricane shelter on the Brac if people realized what proportion of their income they actually pay to government coffers.

McCallum, a consultant who assists people with business advice, pointed out what this means for the democratic process. “There is also a big disconnect between the electorate and government. Voters reward politicians for spending money. We do not hold our politicians accountable as we do not feel we are paying.”

Both McIntosh and McCallum suggested  that, without a tax bill or a salary slip where the tax from one’s earnings was clearly indicated, people don’t see the money government is spending as being theirs. People who pay direct taxes and see how much they are paying from their earnings tend to be more critical of government overspending.

However, Travers argued that the very fact that Cayman does not have income or property taxes is why business comes here in the first place and the indirect tax system was fundamental to the success of the Cayman economy. “So tinker with the tax system at your peril,” Travers warned.

Byles, chair of the Development Bank’s board and MD of Focus Consulting, noted that the cost and difficulties of collecting direct taxes with such a mobile tax base would make it prohibitive. The economist and author said that the transient nature of Cayman’s workforce was unique and no other country in the world was dealing with a situation where half its workers were foreign nationals. “Any tax system mostly take two things into account – how easy is it to collect and how easy is it to avoid?” he added.

While there was a clear divide between McCallum and McIntosh on the one hand, who said they wanted to see a broadening of Cayman’s tax base to reduce some indirect taxes and introduce some direct ones, and Byles and Travers, who were both opposed to direct taxes, all four men agreed that government spending was too high and had to come down. Travers, however, said there was some evidence that this current administration was reducing operating expenses and, as a result, Cayman Finance would be advising government to reduce the recent increases in business fees, which he said were a temporary measure.

The debate took place at the Harquail Theatre on Thursday evening and was organised by the local non-profit organisation, Generation Now, a group of people promoting open discussion on the key topics of the day.

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  1. Anonymous says:

    In other news, evidence has been discovered which suggests bears may well be defecating in the woods. Journalists are also investigating whether the pope is, in  fact, catholic.

  2. Anonymous says:

    Is the Paul Byles mentioned (critical thinker, economist and author) the same Paul Byles that is also "financial advisor to the Cayman Islands government"?

    That’s a pretty dizzying resume.  LOL.

  3. Anonymous says:

    I come from the States and have lived and continue to live with direct taxation and have done so all of my adult life.

    If Cayman decides to enact direct taxation I want it to be made abundantly clear that direct taxation means everyone. There is no place for those who don’t pay their fees or bills now getting away with not paying their taxes in a direct taxation system.

    People will not put up with it. So if a person must lose their house or go to jail for not paying their taxes in a direct taxation system so be it. Unless that reality is completely understood from the get go,then forget about it.

  4. Dennis Smith says:

    The argument that indirect tax costs the poor or "the low Income population" a bigger percentage of their income is true. But being poor is not supposed to be a permanent economic state.


    Turning the poor into some kind of privileged and protected class is a sure way to make being poor acceptable and permanent. More like an excuse for failure than a solution to the problem.


    Using this kind of social conscience thinking to justify changing our entire tax structure with it attendant cost and disincentives isridiculous. The country will be stronger if it concentrates on rewarding success instead of failure.


    What ever happened to stimulating the migration from poverty to prosperity through education, adult apprenticeship and an old fashion work ethic? The best way to not be poor is to make more money. Work harder, smarter and longer.


    In truth the majority of the poor in Cayman are working hard for little pay, living 6 in a shared apartment and sending money overseas. They buy very little and live very economically. Its not likely that they are paying very much of our indirect taxes. If we really want to help the poor perhaps we should pay them more instead of trapping them behind an uninspiring pay structure sustained by economically desperate imported labour.


    This debate should be about increasing prosperity.

    • Anonymous says:

      I’m glad someone is standing up for rich people for a change, because they’ve had a hell of a time lately.  I know someone that lost nearly half a mill from their stock portfolio and had to sell their holiday home in Aspen.

      I think we should increase the tax on the poor.  I mean, it’s not going to raise much, but they don’t really make good use of their money anyway and it might teach them to think twice about being poor next time.

      I mean Jesus was a total liberal wingnut.  Look at some of the crazy **** he said!  Jesus should have learned that sympathy and help for the poor was an excuse for failure.  Instead of creating food he should have created better paying jobs.

      "Speak up for those who cannot speak for themselves, for the rights of all who are destitute. Speak up and judge fairly; defend the rights of the poor and needy."

      -Proverbs 31:8-9
      *But if I speak up for the poor, they will never learn to speak for themselves!  And I’ll be enabling their mooching ways.*

      "He who gives to the poor will lack nothing, but he who closes his eyes to them receives many curses."

      -Proverbs 28:27

      *But if I give to the poor, how they will they ever learn to get off their backsides and work to become rich?*

      "The righteous care about justice for the poor, but the wicked have no such concern."

      -Proverbs 29:7

      *Pfff.  The righteous are a bunch of liberal nutjobs too.  Who do they think they are?  If the poor cared about justice so much why did so few of them become lawyers?*

      • Dennis Smith says:

        "Give a man a fish and you feed him for a day. Teach a man to fish and you feed him for a lifetime."

  5. Anonymous says:

    Everyone is entitled to their opinion, no matter how poorly informed. I listened to the "debate" on the radio, waiting in vain for the first 2 hours hoping to hear from someone who knew what they were talking about. That only happened at the very end when a couple of intelligent questions were asked by audience members.

  6. Anonymous says:

    Maybe we should adjust everything according to people’s earnings.  Let’s not stop at taxes.  Why don’t we make the rich pay 10.00 a load of bread, and 20.00 a gallon of gas on the premise that "they can afford to pay more"?

    If the rich eat at restaurants, especially expensive ones, why don’t they pay more than everyone else?  perhaps a "Rich tax" of 35% above the check?  I mean _poor people_ can’t afford to eat there, which should _they_ be allowed?  _They_ being the rich people who are not really part of _US_ the poor people.

    – Typical, class "pay-your-fare-share/divide and conquer" class warfare, socialism & nation-destroying policies, aimed solely empower power hungry bureaucrats so they can bath themselves in tax money while selling their policies under the camouflage of "justice and equality"

     I am not rich, and rather live in the dream of being rich amongst the (hopefully) rich around me, than to live under the crumbs of mediocrity handed to me of those in power whom have robbed it from the opportunities that would otherwise have existed .

     America and Europe are doing wonders with their tax system aren’t they??  Open you EYES!!

    Companies are running away from the US/Euro penal system of success by droves.  the current US administraton has launched a full on war on prosperity on the guise of "Equality".  The results are coming in.

    Don’t fee fooled by "The small and insignificant tax".  Its always small in the beginning, because no one would ever support a large tax.  But the amount imposed is not the initial goal, its the [ Tax_System ].  Once the system is in, the amount is only a matter of time, and how much division you are able to perpetrate amongst the public.





  7. Anonymous says:

    If Travers thinks that government spending is too high then why did Cayman Finance accept $75,000 from the government? Couldn’t the wealthy members of Cayman Finance have come up with that piddly sum themselvers.

    Surely everyone would agree that this sum came from "everyone" in Cayman, and the benefits would only go to those in finance. Unless, Travers is selling Ron Reagans "economic trickle down" theory.

    Another suggestion would be for members of the financial community, who accompany the Premier on junkets paid for by all of us, to insists that the Premier put them up in budget hotels rather than five star resorts. Even better would be for them to offer to pay their own way.

    • Anonymous for Cause says:

      I know a few Caymanian students who are forced to work fulltime in order to help pay they way through local college without any scholarship support. Their scholarship applications were not even acknowledged and they are currently attending UCCI and ICCI and getting good grades.  One would like to be a history teacher and is a very responsible and well presented young adult. CI$75K could go a long way to helping these young persons to get a good college education.  After all they are the potential future leaders of the Cayman Islands.

      • Anonymous says:

        Nobody is forcing anyone to work fulltime. It is what you do to achieve your goals. Griping because handouts were not received does nothing. These students you refer to will be able to look back on the struggles they went through to get ahead and will realise it made them stronger individuals with a better sense of what a dollar is worth. Welcome to the real world. The good times are over and hard work will be rewarded. Those who wait to be taken care of will be disappointed and left behind in the future.

      • Anonymous says:

        Welcome to planet earth.

      • Anon says:

        Yeah? So what? Working a full time job while pursuing a tertiary education is not uncommon anywhere else in the world.

        Good for them for not giving up on their goals. Keep it up students, hard work will be rewarded.

      • Anonymous says:

        That goes for many people in most places in this world including myself…  Although nobody ‘forced’ me to work.  I recognised that once I left school, I needed to do that anyway to get ahead, whether it was to support my further education or not, and I had to find a way to raise funds to pay board to my parents – something some parents should perhaps consider here to try and instil some responsibility in their youths.

    • Dagny says:

      It would appear from your post that you do not believe in Regan "trickle down economics", otherwise you would not have put it in quotations.  Take a look around at what is happening in the economy here – now.  Businesses, and especially financial services businesses, which contribute 54% of the GDP, are being squashed by the high costs of doing business and the impediments that prevent ecomonic stimulation  – a faulty immigration legislation that acts as a deterrent for new business creation and existing business growth, uncompetitive fees and now a threat of direct taxation, all to cover up for the fact that our civil service is too big and the most highly paid (salary and benefits) in the world.  This is what has caused the shrinkage of the Cayman economy.  There are fewer businesses here because there are fewer people here – living and spending and being productive members of society.  A job lost for an expat is a job lost for a Caymanian and this is the situation that is right before your eyes.

      It has been said over and over again that Cayman is not doing enough to actively market itself – our competitors are falling over themselves to pick up all the new business they can and targeting our existing clients.  The people who live in those jurisidictions have figured out what side of the bread has the butter.  It is only in Cayman where people think that the world is lined up at our door ready to give us a handout because we think that someone (God?) owes us a living.  The rest of the world knows that you have to work for it.

      If the CIG has given Cayman Finance $75,000 to continue in their efforts to promote the Cayman Islands, then it is money well spent.  They have their work cut out for them, since one of their biggest hurdles seems to be the faulty logic and poor sense of judgement as displayed in your narrow comments.