Ruben Anton joined GDP Global as Client Services Manager in early 2009 and has since worked closely with GDP directors to deepen his knowledge of the industry. He is an honours graduate in English T...May 5, 2010 – While government pursues the goal to have inward investment as the source of future new revenue for government coffers rather than taxes, the UK is continuing to push for some form of direct taxation in Cayman’s next budget. Although the premier has cited the possibility of both payroll and VAT, a government spokesperson told CNS on Friday that no decision had been made on any form of direct taxation. Meanwhile, in the wake of the Miller/Shaw report, the Revenue Measures Subcommittee of the National Investment Council has submitted its report to government, which also found taxes would be far more harmful than helpful in Cayman.
Although Bush has said that he preferred the idea of a 5% VAT earlier last week, on Friday he said it was probably the most problematic and was still considering a payroll tax or a community service fee. In the end, the premier said, it would be the one which was the easiest to be administered that would be the one government was most likely to introduce if the CIG was forced to implement direct taxation.
The Investment Council also met with industry stakeholders last week in order to solicit further feedback from the business community about possible investment projects, new revenue streams and viable avenues for sustainable economic growth that could stave off the need for taxes.
Bush said at the meeting that government had to find new sources of business to diversify the economy and improve the government’s revenue base. “The National Investment Council is uniquely positioned to bring together input and recommendations from a variety of key organizations, boards, committees and individuals to create a holistic blueprint for economic recovery and growth,” the premier added.
Council chairman William Peguero underscored the importance of a ‘country first’ focus. He pointed out that NIC members were aware of work and reports that had been commissioned in the past by various bodies and the council would be “dusting them off and reviewing them with a view to gleaning the best ideas that would enable the NIC to set a strong foundation for future economic efforts.”
The Revenue Measures Subcommittee has found that taxation would be bad news for Cayman and more harmful than helpful. The sub-committee suggested that cost-savings measures could be considered equal to revenue raising measures. Peguero who also chairs the subcommittee said the members are working hard with all the government offices to stream line the process for projects and investment and find ways to improve Cayman’s future fortunes but that any form of direct taxation could be detrimental to the future economy.
The NIC report submitted to government last week recommends cost savings, divestment and sale of assets and land as well as gaming licences and watercraft licence fees but not taxation. The report suggested that indigent Caymanians receiving government health care should be relocated to qualified healthcare facilities reducing costs. It also recommends that government seize assets from companies struck off the company register for 10 years or more.
The NIC was created as one of government’s first steps in the goal to develop a long-term strategy to create investment opportunities. The council consists of members from the private and public sector and it reports to a special Cabinet Committee, chaired by Bush with five elected representatives. The members of the NIC are William Peguero, Michael Ryan, Jim O’Neal, Burns Connolly, James Bergstrom and Marcus Cumber.
The first order of business for the NIC was to evaluate options for economic diversification, and according to the Terms of Reference, the development of new industries and new opportunities must allow Caymanian entrepreneurs to thrive.
With the government faced with a deficit for 2009/2010 and still in need of borrowing approval from the UK, any new long term investment opportunities may now be too late to save Cayman from direct taxation.
