The Quadruple Whammy of Fuel Taxes
The “pain at the pump” is being felt Island wide by all who live and visit here. This is the first “whammy” and the most obvious. To most of us, the excessively high cost of gasoline is a direct hit on our wallets. Mr Elio Solomon has recently said that he “feels” that the majority of people in Cayman accept the higher gas prices in order to support their country.
What Elio is missing is the fact that his way of thinking in economic terms will eventually destroy this country to the point where there is no country left to worry about. Here are three more ways that high gas prices hurt each of us and the country as a whole that Elio has overlooked.
The second “whammy” to our wallets comes in the form of opportunity losses to the economy. This means, the extra money spent on gas will not be spent elsewhere to help boost the economy. The third “whammy” comes in the form of higher prices at the local stores due to retailers having to pass their higher costs on to us.
So now we have less money to buy products that costs more than ever. The fourth “whammy” is to the country as a whole. We depend on the outside world, specifically visitors and investors, for our source of operating funds. If the costs here are too high due to government taxing necessities, then this discourages investment and motivation for people to come here and support our economy. Taxes are a blockage to productivity and growth. Taxes are the instruments of uneducated leaders who think taxing the working man will make things better. What matters here are percentages. A few cents more per gallon at the pump represents a much greater percentage of the low wage earner’s income than that of wealthier persons and businesses.
The impact to the small guy is tremendous. It is the spending power of the working class that drives the economy. It is obvious that our current elected officials believe wealth trickles down. If this is the case then they are taxing the wealth at the wrong end, after it trickles down. The time to tax it is at the source before the trickling occurs. By keeping the cost of living down to the little guy the money will trickle back up to the top as goods and services are purchased.
Making Cayman more affordable for residents and visitors is how to help and support this country. If Elio is suggesting that taxation is the only measure we have to increase the needed revenue for government to operate, then he is overlooking the expense side of the equation. Revenues should be increased first by cost cutting. I assure you that tourists and residents would gladly suffer a few potholes or less roundabouts on our roads than to have taxes placed on fuel that increase the overall cost of living here. Cut the fat from government and only then consider taxes that harm the spending power of our people.
Elio is also suggesting that people be allowed early access to their pensionmoney in order to purchase housing. If they can’t afford a house without ruining their pensions then they won’t be able to afford the maintenance of home ownership and will end up penniless when retirement comes, thus adding a greater burden to society down the road. By allowing people to spend their pensions, he is borrowing from the future at our expense in order to try to bail out the present mess caused by high taxes and fees.
Tourism and investment in Cayman is the goose that lays our golden eggs. Our government is spending money at a faster rate than the goose can lay these eggs. There is only one poison that can kill the goose and the poison is taxes. Less tax means more geese. Get it?
Category: Viewpoint
NYMEX crude closed at under US$99 today. Gas taxes are evil, yes, but, like death, inevitable. The real issue is how much of the drop in crude prices will the retailers pass on and when?
Cycle lanes are OK but tend to be populated by demented cyclists and their partners who insist on riding two abreast – no thanks.
CIG is bonkers. What is Bush up to cancelling the berth?
Cayman is well on its way down the tubes. Competition is what is needed here. Let's have some sensible 21st Century behaviour – get rid of the ownership requirement for businesses which trade on Island, reduce prices on Cayman Airways so that more seats are filled per flight (Bush this is actually a more profitable way of doing business), cut hotel taxes so hotels can attract more visitors (again, earning more tax dollars) and don't allow existing businesses to object to the establishment of new ones. Let's have a Walmart on SMB and see Kirk and Fosters learn the lessons of real life commerce the hard way. This place needs a serious wake up call if it is going to avoid a complete collapse.
You are speaking way above mental capacity here.
You are promoting capitalism and free markets and enterprise.. This website us a website geared towards a campaign for euro-socialism using opinion-shaping activism (referred to as journalism here), ready to undo anything that resembles or anyone who supports those principles.
solution = casinos
Ive started to ride my bicycle to work(i understand not everyone has this option)prepare my meals and spend less on unnecessary items.
Thus far im able to save more than ever, my health has increased significantly and my self discipline has grown to a new level.
Point is you always have options
Car pool with family or friends/share fuel expenses
Use public transportation-not as bad as u might imagine
No more luxury drives
Check air pressure in car tires to make sure they are no under inflated, soft tires results in poor miles per gallon.
If financially possible downgrade from a v8 or v6 vehicle to a 4 cylinder
Now is the time to humble yourselves, give pride a break and become creative.
I wonder if the Premier will be doing the same?
4 whammies Mr Bean, whew. The local price of fuel has just gone above $6 if we remove all the tax from fuel the it would drop it down to $5.25, that is still expensive, you know Bean the contry will then have to find 30 milion dollars to make up the shortfall. Where will the money come from, what tax would you like to implement to replace it.
Listen I can cut my fuel bill in half if I wanted to, I could turn off my A/C at my house I could ride a scooter, I could sell my boat. I have choices, and so does everybody else.
So if I chose to use a lot of energy I will pay a lot of tax.
Bean do the maths and actually calculate how much a 75 cent drop in the price of fuel will impact the cost of goods and services in the contry, you will see it works out to a much less than 1% gain in prices. Your CUC bill drops by 3%
Richer people use a lot of energy and they are not going to change their energy consumption habits because they are rich. The richer people among us will actually end up contributing a greater porportion of any energy tax to the treasury, and that is how it should be becase they can afford it. Capice ?
Why the Chicken Really Crossed the Road
Yes, to this day, most people still believe the chicken crossed the road merely to get to the other side. The truth is, he crossed the road because taxes were lower on the other side and the cost of living was lower as well. His money had more buying power on the other side. (by the way, he never went back).
A couple of hundred years ago a similar crossing took place when the King of England taxed people into submission. Rather that crossing the road, they crossed the “pond” and formed a new country now called the USA. Although taxes there are now getting to be a problem, the people have developed ways to change policy rather than flee from it.
When Cayman Airways and the local hotels offer their discounted Summer vacation plan know as “Summer Splash”, people make the crossing to our shores for the added value this program gives to their dollar. These are but a few real life examples of how making things cheaper attracts people and commerce.
In answer to your question about how government would make up for the shortfall created by eliminating fuel and energy taxes, the answer is by making it more affordable and attractive to visitors. Full hotels and condos and airplanes are the key to making ends meet in terms of government revenue. Further proof of this fact is that in the early “boom years” of Cayman’s growth, the population was much less, there were way fewer hotels and condos, the cost of a round trip ticket was US$110.00 from Miami, and the Government was running at a surplus. It is a bloated and excessive government that is trying to become the country’s largest employer (socialism) that is the cause of ever increasing taxes and fees. By lowering fees and taxes and downsizingCIG the money will flow like a river and those who cross the road to come here will not want to leave.
Any policy that works contrary to the above principle is doomed to fail as you can plainly see by the events of the past several years here. Continuing on this path will only dig us deeper into the debt hole created by those who think we can tax our way out.
Bean
Lower taxes and fees?! We have some of the lowest in the world! How do you expect to pay for our roads, hospitals, and schools. Agreed that downsizing the CIG should be our primary objective, but the notion that tax decreases pay for themselves has been disproved so manytimes that its a great natural wonder that these ideas still exist. Look at the US national debt after Reagan and Bush lowered taxes. Skyrocketed!
Our taxes are already low enough, so the question is not whether we should lower taxes and fees. The question is … which taxes and fees hurt us the least? I believe that the author is correct that these gasoline fees currently hurt us far too much. We have a terrible public transportation system and our roads are far too dangerous for bicycles and scooters. Until these issues are addressed, we must be able to drive our cars. Its a shame that the government didn’t have a little foresight in the first place and encourage electric vehicles, scooters, and bicycles. But they didn’t and now we have to live with this nightmare.
Bean are those figures you have quoted for solar power and concentrated solar power correct ? What is the number for wind turbine power ? Why has CUC not set up alternate energy plants if it is so much cheaper than our deisel powered electricity plant ? Why has a private entity not set up such a plant ? It seems that there is a lot of money to be made in power generation, how come the private sector has not seized control of this situation ?
It seems that because of our situation hear in Cayman we are a prime candidate to become a guinea pig for say a large company like GE to invest a huge amount of money to make us the first contry to go completly green. For free !!!
I’ve been asking the same question for years. I did my own cost study late last year on this subject. To make a very long story short, I will refer you to searching Google for information on Andasol Solar Thermal Power in Spain. Although there are many of these types ofinstallations around the globe, One of the Andasol projects is a 100 mega watt facility which closely resembles the size we would need here in Cayman. The beauty of this system is that it pays for itself in about 1 year in most cases. Payback in Cayman would be faster due to our higher than normal electric bills. Most companies will arrange financing. These systems heat fluids and store them for use at night for continuous 24 hour per day electrical generation. Diesel plants are kept as a backup. Photo voltaic cells and wind power are considerably more expensive and suffer the problems of darkness and lack of wind. Currently, under the energy buy back plan offered to CUC customers, a residential solar cell installation has a payback period of about 10 to 12 years and the life expectancy of such cells is only 20. Cayman could be almost totally self sufficient in power generation from the sun in less than 2 years using solar thermal generation with heat storage facility. Of course this would be a problem for government since it currently collects sizeable duties and taxes on the diesel fuel burned by CUC. This added cost is of course passed on to us in our electric bills every month. Solar would create a giant hole in the government’s revenue stream unless it decided to tax green energy which would be a shame. I’ve noticed from other postings here that people think by riding bikes or walking they are solving the problem. If everyone decided to abandon their cars and ride bikes instead, government would be forced to tax the air in your tires and the seat under your butt in order to make up the shortfall in tax revenue gained from automobiles and gasoline. Please note that a power plant such as Andasol in Spain cost close to 400 million US$ but the payback is very short. In the United States, it is law that a publicly traded company’s number one responsibility is to producing the most profit possible for its’ shareholders. CUC also is a profit driven company and has lots of shareholders. Their shareholders should be made aware that CUC coulddo better by them by building such a solar facility and reducing the costs to consumers. In the long run it would mean more profits and a healthier economy overall.
Bean
I estimate that CUC will be at 45cents per by August.
Economics 101: recession, losen monetary policy….lower taxes and interest rates. Neither has happened here.
How do we pay $6 for gas now when it is below $100 per barrel?
How does one (Texaco and Esso) justify that?
Beancounter, with the greatest respect, I thought the chicken question was finally put to bed a few years ago when a chicken was secretly filmed actually crossing a road in Montana, and it was quite clear that its objective was not just the bar over the road, but the Budweiser they served there. I know it's true, because I witnessed it on TV during 'Superbowl. You really should try harder to keep in touch with the latest animal behavioural research..
Hopefully fuel prices should go down as indicated on the international news this A.M. They are expecting a reduction of .050 cents in the US by the end of the month. The price of crude oil and it’s future have stabilised. I know it depends where the fuel companies make their purchases of bulk fuel. Question IS will Cayman gas prices go down ? and when ? Please ignore the comments of Elio Solomon as he is being trained by the best at the moment and definatly not in touch with us the little people (until comes voting time).
What freakin’ planet is Elio living on for chrissake? Is he serious, or just seriously clueless?
Hey, you moron, “feel” this: People “accept” the high fuel prices because we have no damn choice but to pay up or walk.
One of the few intelligent things this pretty awful government has done is increase the duty on fuel. Every moron that drives a huge SUV that does an average 10mpg is encouraged to trade their tanks in for a car with a smaller engine.
It does not take a rocket scientist to understand that driving a more efficient car means less of a dent to the wallet.
The environment benefits from people driving fuel efficient cars, rather than a double whammy I’d say its a morally sound consumption tax. Jesus has taught us that we should love the trees and the sea and the little jellyfish and the soldiers and red shanks.
True dat rasta, if you want to have a big car, a huge air-conditioned house a big three engineed boat, more power to you my friend, and the treasury thanks you for the your generous contribution to the reduction in our national debt.
How about if we chop the $9m dollar Hurricane Hilton off the books and use that money ot offset the losses from the having the gas tax?
Cayman Brackers, would you rather have the luxurious Hurricane Hilton or lower gas prices?
I want to hear from some Brackers please…$9m million dollars can buy a lot of fuel on Cayman Brac.There is no sense in having every road and parking lot paved if you can’t afford to drive your car on them. Please ask Julie to take the money and use it wisely. Come on Brackers, if not for Grand Cayman, do it for Cayman Brac
Let me tell you why…..If people took there pension and put that money to work today they buy land cash borrow from the bank and use that money to invest at a low rate of interest in other worthwhile projects. Currently the pension invest overseas and guess what it is underfunded. Now that is the reason why the plan really won’t work is because people would empty the fund and then the pension scheme would be empty and not around to fund the current people who are retired. Hmm sounds like a scheme to me alright
Maybe everyone would just be happier with some income tax then?
Maybe NOW they will FINALLY at least consider bicycle lanes on ALL major roadways. (But I doubt it. Vehicles are too much of a status symbol here)
This should have been done years ago when they last resurfaced West Bay Road.
Build it and “they will come”. I know plenty of people that would prefer to bike to work, but South Church Street for one, is way too dangerous.
We know the only reason the new bypass out in Newlands has a bike path. YEA!!!
Question for thought: Why cant the government drop the fuel tax and triple the tax on liquor and cigarettes?
Because I would rather ride my bike and then have a cold, affordable beer.
Why can’t we implement a proper public transportation system with properly and professional run buses (not those little nasty dingy ones that drive at who knows what hours and have no professionalism, reliability etc.)
I know it is an attitude change and a lot of people who live in Cayman think this is only something the lower income group should have to do, but it is common in many other places all over the world.
1. It would reduce traffic flow
2. Reduce fuel need
3. Beneficial for the environment
4. Reduce the need for additional roads etc as traffic flow would be reduced
5. Eliminate the struggle of finding parking spaces for various business staff in town
6. Give us perhaps the option on certain days of the week to make town center pedestrian only. Bet the tourists would love that!
We could do away with the increased fuel tax all together if Mac and JuJu were not spending vast amounts of money on luxury travel and ludicrous projects that look for all the world like attempted vote buying.
Whatever poster 11.28, ding bats.
I work very hard every sinlge day and so does my husband. With both of our incomes we are suffering so bad that we decided our ONLY option is to find another country to live in!! If anyone thinks I’m joking you’re dumber than McKeeva.
It is so hard that we can’t even contemplate children ;-((!
I’m Caymanian and I work in a great job, and still it’s penny pinching every month just to make ends meet and most times we have to exclude certain things like lunch money, spending money, etc. The amount I allot for gas each month is a joke because when you go to get fuel the amount can only get me gas maybe twice, to last the whole month!
I’m sure all of the idiot politicians think our lives are as easy and dandy as theirs but if they’d only do their jobs and go out and talk to the people who put their sorry @sses in the LA then they would know. The poor and hardworking people of Cayman are taking blows from every angle with no relief in sight.
What are we to do, I’ll tell you, support the MLA’s with back bones and March down to the LA on the day they bring the Motion of No confidence to the House!!!
I agree and understand exactly where you are coming from and it is shocking that the Government can’t realize that even the middle class income people are struggling nowaday.
My husband (born and bred Caymanian) and I are both college educated, have to good jobs, and two children. We are living from pay-cheque to pay-cheque so to speak with no substantial savings. I know that a lot of people may think that we are unable to budget and waste money, but we don’t. We do not drive big SUVs or expenisve cars, we don’t own a boat, I do not get my nails done or facials etc. We rarely goout for dinner and only take our kids to the movies about once every quarter. We do however have a helper who we pay very well, (better than what most wealthy people pay their helpers) as we do not want to exploid anyone. We also do spend money on our childrens’ education and their extra-curricular activities as we believe it is important to provide them with opportunities and exposure. Still, at the end of the day we would not be able to survive in Cayman if one of us would loose our job and we are certainly in no position to make any further investements in the Island. We never thought that the day may come where we have to leave our home and pursue options anywhere else, but unfortunately this is becoming a reality more and more every day
I agree with you 100%. I have a good job, good benefits, one child and a husband who works. I have a small car, school fees, no mortgage and we are struggling more and more every month. Forget about saving. I just looked up my pension statement for March. Believe me, I do not have a huge pension. Expenses for one month over $500 dollars – more than I contribute – so what will I end up with? You got it – NOTHING!!! The Pension Administrators need to be looked at closely. What do they do formy pension to charge $500+ per month? Most of my pension is invested in fixed income so you know not much is being done. If this Govt. gets back in – I’m out of here too. Life is too hard. I don’t know how people earning a lot less and the sick and elderly can afford to live. While the fat cats take salary, pension, all expenses paid, housekeepers, security guards, travel, parties, lavish food, etc. etc. If any one of them had a conscience, they would give up some of their perks and sit down and look at what can be done to help their people – I won’t say those who put them there, because I certainly did not vote for them. I learned my lesson from the last time they were in and the Premier’s attitude after Ivan when people wanted to help and HE turned it down because he was afraid of losing tourism. What tourism? We didn’t even have anywhere for tourists to come. What a disaster. I am so so sad to see what has happened to Cayman in the 30 years I have been here. .
Elio is full of xxxx. That is all
Tell it like it is Subway Cookie!!
Cayman is done. If nothing else Grand Cayman will stand as a great example of what happens to a functioning country that is lead into bankruptcy by its own people. Everyone can agree (except for the uneducated and misled) that Cayman is going down hill fast. What most people don’t see is that there is nothing in place that can stop or even slow this down. Doesn’t matter if PPM or UDP is running things and thats the only choices. Doesn’t matter if the UK gets involved or not as its plain to see CIG can not take any criticism or expert advise because if you don’t know it yet the "ONE" who makes the important decisions does not need any one else to tell him what to do. Nothing has changed and nothing will so the inevitable out come is the bankruptcy of the CIG and everything Caymanian. Better start packing.
Erm, I’m not sure that tourists (most of whom will buy little or no fuel) or residents (who have a not-very-vested interest in the roads being safe) would be willing to compromise on road maintenance just to save a few cents at the pump. I’d rather not have to pay up a few hundred dollars to have my suspension fixed, or have to cope with not only bad driving but bad driving on bad roads.
Rising fuel prices are a fact of life across the world- a reduction in duty can only be a short term fix as retail prices continue to rise. As a small island, Cayman ought to be better placed than most to cope with this situation: smaller cars and fewer journeys are realistic goals here. The days of driving a 4 litre V8 pickup on a journey half a mile down the road are coming to an end, and we need to adapt to this sooner rather than later.
However, couldn’t agree with you more about the total lunacy of the suggestion that people access their pension money early to purchase housing. Sounds rather like asking for volunteers to rearrange the deckchairs on the Titanic.
I used to argue that I only drove a 5.4 L Tank because it pulled my boat but as I can no longer afford the fuel for the boat there is no point owning a gas guzzling monster (except that I can’t sell it…or the boat).
Not using the boat means that it no longer needs frequent expensive maintenance and I have no need to spend thousands of dollars each year on tackle, bait, lures etc.
My point is that the boat yard will suffer, the gas retailer will suffer, the fishing shop owner will suffer….their staff will suffer (many are Caymanian) I will end up on a scooter and McKever will end up filthy rich…..does something smell fishy?!
As for Elio….here is a classic example of “engage brain before opening mouth”….still he is a venerated MLA, so somewhere someone thinks he’s great….but who are you?