Suggestions for the premier

I write to you today along with my fellow Caymanians, Chaz Hill and Eden Hurlston.  Together, we represent the members of a group known as Caymanians & Expats United Against Taxation. As a group we have very little interest in how our country has arrived at the threshold where we now stand.  We concern ourselves with the past only so that the mistakes of ourselves and others may be identified, then used to educate ourselves in such a way that history is unable to repeat itself.

Our vision is for the future.

Today we wish to convey to you our thoughts in relation to the Community Enhancement Fee which has been proposed recently.  To begin with, we would like to address the title of this proposed legislation.

Despite the euphemistic title you have used to describe a payroll tax it remains just that, a tax.  The word tax can be defined as a compulsory contribution to state revenue, levied by the government on workers’ income.  Your proposal is therefore a direct tax which is to be levied on a subsection of our population, so please allow us to refer to it as such.

The payroll tax which has been put forth by your administration is discriminatory, and as our group looks forward to the implementation of Human Rights in Cayman on November 6th, 2012, we cannot accept it.  Additionally, the proposed tax will reduce the purchasing power of those on whom it is levied, and therefore be detrimental to our economy.  Furthermore, the implementation of a direct tax will no longer afford the Cayman Islands the title of a tax neutral jurisdiction, which is the foundation of the way in which most countries of this world see our nation.

Of particular concern to us is the information contained within the Miller-Shaw report.  As you know the Miller-Shaw report is within the public domain, and has been since it was commissioned by the current administration in 2009.  This report, which was compiled by professional economists, speculated that the implementation of direct taxation in our jurisdiction would result in the contraction of our economy.

Since the announcement of the proposed payroll tax it has been highly scrutinized by the international press.  Most notably, an article published on Forbes.com which likens the implementation of this payroll tax to fiscal suicide.  To date we have been able to locate no less than six international outlets which have carried this story, and we are yet to find a single one which believes this policy will benefit our country. 

We also assume your administration has recently received reports which present evidence contrary to the above.  We arrived at this assumption as it is simply impossible for us to believe that our government would be irresponsible enough to implement a policy of this magnitude, which goes directly against the conclusions reached by their own commissioned reports, without first consulting a wide range of knowledgeable economists. 

Therefore, on behalf of the Caymanian people, we call for you to release these reports into the public domain so as to alleviate some of our concerns related to the payroll tax which you intend to enact.

On Monday, as representatives of our greater community we wish to present to you, a series of proposals which show how our government can increase existing revenue streams as well as produce new ones, whilst also minimizing the negative effects of such measures on our economy.  Together, these proposals, none of which involve direct taxation, amount to an increase of projected government revenues which is by no means insignificant.

Although some of the proposals we intend to propose shall require initial capital injections to create a new stream of revenue our group has aimed to maximize short term return by focusing on alternatives which have preexisting methods of collection.  This is strengthened by our opinion that an approach which produces the desired revenue through a series of relatively small gains across a diversified range of government policies provides less risk of a budget shortfall than would otherwise be the case with a single piece of legislation aimed at collecting fifty million dollars.

It is worth noting, however, our group is of the firm belief that the people of the Cayman Islands have not met these difficult times due to low revenues.  Rather, we acknowledge the fact that our current budgetary issues are the result of careless and excessive expenditure by our government in recent times.  This belief is in fact reiterated by the very definition of deficit; the amount by which expenses exceed income.

As stated, our vision is for the future and we consult the past to learn from the mistakes of ourselves and others.  Last year your administration successfully proposed a budget which did not include long term borrowings and perhaps generated a small surplus.  However, the budget which has just been submitted to the FCO appears to propose total expenses which exceed last year’s projections by nearly sixty million dollars. 

To achieve the positive results of last year your administration asked the public to provide you with greater amounts of revenue.  Although there were several, the request which stands out most significantly is the two percent increase in duty charges on all dutiable items.  Despite the public obliging these requests we again find ourselves being asked to provide government with additional revenues.

Although the revenue generating measures we shall propose include both short term and long term measures, we refuse to once again allow our government to use these measures as a temporary patch over our increasingly unsustainable budget.  Doing so would simply postpone the inevitable and we would once again find ourselves in this situation within a few years.  We will therefore also present to you a series of proposals which are aimed at reducing government expenditure. 

Mr. Premier, you have stated that you are open to hearing alternate solutions, as you do not desire to impose a policy of direct taxation.  Our group feels that we will be able to provide you with a list of reasonable and economically viable alternatives.  We will therefore look forward to your response, and respectfully as that it be made within the public forum as the group which addresses you today is nothing more than the voice of Cayman.

The above has been forwarded to the office of the premier in response to his recent invitation for suggestions to help raise a budget surplus of $76million.