Viewpoint: Open Letter to Marco Archer

| 16/10/2015 | 36 Comments

Cayman News ServiceA CNS reader writes: In January 2010 the government increased custom tariffs on all dutiable imports within the Cayman Islands by 2%. This increase was applicable to goods consumed by all residents of the Cayman Islands and was said to be compensating for the policy decision to discontinue the charging of garbage fees to residential customers.

As a young Caymanian just starting out, I recently purchased a 2-bedroom unit in a strata complex with monthly strata fees of CI$450.00 per month. When I queried the composition of this fee, I was shocked to find out that it included a CI$8,500.00 per year charge by the government to collect our garbage. The complex has one dumpster and the garbage truck comes around about once per week.

In my mind, picking up one dumpster is more efficient for the government than if they had to stop at 40 different households and empty individual trash cans. Where I live is clearly a residential development, therefore, why do I have to pay directly for garbage collection when we were promised 5 years ago that fees for residential garbage collection would be discontinued? I have certainly paid the increased duty — there were no breaks for people living in a strata — so why am I taxed differently because of the style of housing I live in?

On another note, much has been said recently about gas prices at the pump. Quite often, the catalyst for these complaints is the decline in oil prices on the international market. The local fuel companies have also been vilified (perhaps to an extent rightly so) for not dropping fuel prices here by similar margins as the drop in the US.

However, I offer to you that there is another agent whacking the proverbial piñata that is us the public in this fuel price game. That entity, it seems, has quite a hefty stick and is none other than our own government. The government claims they are swinging blindfolded and so are not able to bring relief unless they can see how the other guy is swinging, i.e. how much is in it for the fuel companies. While I’m all for that and honestly believe that the fuel companies could be a little less gluttonous, I also believe that my own government owes me some relief and that they are not doing enough to make it more affordable for the rest of us. Let me explain.

The US Energy Information Administration estimates that approximately 31 gallons of fuel is produced from each barrel of oil (see here). When the fuel produced is imported, our government adds approximately 39% to the cost. (CI$0.75 per gallon import levy converted to US dollars at 0.8 = US$0.94 per gallon fuel tax per gallon, times 31 gallons produced by a barrel = US$29.14 local tax on the fuel produced by each barrel of oil).

That additional US$29.14 does not change with fluctuation in prices on the world market as it is based on volume and not on cost. Today, oil was trading on the Nasdaq at approximately US$46 per barrel. That means the landed cost in the Cayman Islands for that same barrel would translate to US$75 (price per barrel of $46 plus local government tax of $29). The government’s cut out of that landed cost of US$75 is therefore 39% (29 divided by 75).

Minister Marco Archer, I would like to get your views on the above, which are only two items of many. I would also like you to tell us whether you think we are getting a fair shake from the local tax system that is under your purview. The cost of living is really hurting us out here and I’m waiting to hear what you plan to do about this.

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Category: Economy, Politics, Viewpoint

Comments (36)

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  1. Anonymous says:

    It would be good if folks paid attention to what was happening. Here is an extract from the budget debate- found here:

    “This Government has recognized the challenges faced by many Caymanians
    on a daily basis in trying to make ends meet. The Government therefore
    took steps to provide relief to the average citizen through the reduction in
    rates for certain revenue items which will continue to have maximum impact
    on disposable income and the economy over the coming year…The reduction of two percentage points on the majority of dutiable items was
    one measure that the Government implemented in 2014/15 which will
    continue for the 2015/16 fiscal year….everyone knows that the cost of electricity in these Islands
    accounts for a major part of private household spending as well as the cost
    of doing business. In 2014/15 the Government began to provide some relief
    by reducing the import duty placed on diesel fuel consumed by CUC by 25
    cents per gallon which took effect in January 2015….
    In addition to what has been detailed above, Madam Speaker, the
    Government will again reduce the import duty placed on diesel fuel
    consumed by CUC by an additional 25 cents per gallon starting on 1
    January, 2016…
    Therefore, the total diesel duty reduction from January 2015 to June 2016 is
    $16.8 million when considering each 25 cents reduction in January 2015 and
    January 2016. This reduction will provide further relief to the cost of
    electricity as well as generate increased disposable income to be spent in the
    local economy…the Government’s planned award of a 4
    percent cost of living adjustment which is expected to cost the Government
    $7.5 million… the total stimulus package in the 2015/16 Budget is $20.1
    million: $12.6 million in diesel duty reduction and $7.5 million in a cost of
    living adjustment to the Civil Service. This represents a direct increase to
    disposable income, to be spent within the local economy”

    In summary – Government rolled back the 2% import duty; duty on CUC diesel has been rolled back and will again be rolled back in January so that the import duty will be reduced from $0.75 to $0.25 per gallon(?). Government has reduced fees for small business licenses and more. and government realised that many civil servant’s salaried has not kept pace with the economy and provided a 4% raise this year. All of this is money that will be spend in the local economy.

    And these were paid for by savings and efficiencies- no new taxes. And there is still a surplus to build cash reserves and pay debts etc.

    A good two years if you ask me.

    Peace out

    • Anonymous says:

      There is none so blind as he who refuses to see. What was the tax burden five years ago? what is the tax burden today? Where were the majority of the increases?

      It is all misdirection and smoke and mirrors, the tax burden went up by over $100 million per annum (and yes the UDP did it), but you know where majority of it came from? domestic levies on goods and services, do you know what that means, it is is being paid by the consumers in the local economy.

      What was the annual expenditure per year when the PPM took office? what is it now? do you see $20 million in savings that you could ascribe to the stimulus package referred in your post?

      People can say anything in a debate and fool people like you, but facts and figures don’t lie.

      The facts are, stratas are paying garbage fees when private households aren’t and government is still levying $75 cents per gallon on gasoline and diesel for motor vehicles. There has been no reductions in that levy and no promises for any.

      You can therefore try to misdirect all you want, but the facts still remain. It was a simple question to the Minister, why do some citizens have to pay for garbage collection for their homes and others do not.

      Before we complain that the sack the other thief is carrying is too large (i.e. the fuel suppliers), perhaps we could consider giving back some of the loot from the Government’s sack by lowering the import duty on gasoline and diesel for motor vehicles. That is what the 14,000 signatures are about, that is what the legislation currently being debated is about, not the PPM stimulus package.

  2. Anonymous says:

    That’s not how it works here! If you want government concessions you need to cozy up to an MLA or two or a couple of senior officials. Look after them and you won’t pay any duty or garbage fees. In fact you might just get a few lucrative contracts or other deals diverted your way and then the import duties and fees other people pay will go straight into your bank account.

  3. Anonymous says:

    One dumpster for one year, rental plus service, costs KYD $2,436. Either your strata is ripping you off, or you haven’t done your homework. Why can’t you get your facts right before inflaming people’s opinions with false information?

  4. Anonymous says:

    Great viewpoint but unfortunately you are not talking to a true minister of finance you talking to a book keeper. All this guy knows and worries about is balancing budget forget the ppl living without food, lights, water. Etc

    This Government is clueness and I know the voters must be so disappointed in them!!

    • Anonymous says:

      7:43. Too many people looking to government for help. The government is not a sperm donor. How many drug addicts are living at home and have to be feed by their parents? They are encouraged to live lazy, useless, unproductive lives, and the expectation of an handout,, not an hand up.
      I am Caymanian, has never expected government to give me, and has persevered and worked hard my entire life for what I have. What government should do is, set up
      classrooms in the districts and teach those dependents how to manage money and be able to provide for their families.

      • Nuts says:

        What else can we expect when votes are bought? Term limits will produce a more efficient and performing government. Too many career politicians and deadbeats running the islands

      • Anonymous says:

        Ignorant comment, did you even read the viewpoint? the writer was advocating for a tax system that is more fair to all citizens, where is your rant coming from?

        Consider this, if the Government taxes fairly and reduces the burden on its citizens, the wages earned will go farther in meeting their everyday cost of living and therefore reduce the need for government assistance.

        I shudder at the thought that perhaps it is the government’s strategy to tax us to the point where we cannot make ends meet on our own and have to turn to the country for assistance; after-all, he who pays the Piper calls the tune, and being dependent on them for your next meal puts them in a much better position to control and influence your thoughts, actions and yes votes.

    • Anonymous says:

      Agree 100%, however, as they say, when all you are is a hammer, it is easy to treat everything like its a nail.

      I plan to write a viewpoint myself that puts his entire term in office so far into perspective. No fiction, just the cold hard truth. Why? not to tear anyone down, but to try to get him to stop coasting on coat tails and actually do something rather than take credit for the unpopular decisions taken by the previous UDP administration when they introduced a huge revenue enhancement package and signed the FFR.

      I have no doubt that Marco is a good person, however, when I voted, I wasn’t looking for a good friend or a church buddy, I was looking for someone to lead our country with wisdom, innovative thought and fairness.

      Marco has simply been in the right place at the right time and benefited from a set of circumstances he had nothing to do with. It therefore really irks me when I hear him out there pretending as if he is this sage financial and economic guru that is rescuing the country from Armageddon.

      Where are the policies? Where are the initiatives? Where are the efficiency gains? Where is your plan Mr. Archer? We saw what Mr. Bush did, and right or wrong, he took the licks for it when he raised fees on the Financial Services Industry and drastically reduced public sector costs, but at least he did something, and he paid the price at the last election. I am still waiting to see you do something.

      Yes the debt payments have been made as scheduled and there is a lot more revenue than we have permission to spend, but is the average citizen better off? are we coming home with more in our shopping baskets every week? is unemployment lower? are there fewer homeless people out there or fewer people depending on government for handouts?

      The answer is no! The truth is, people are queuing at the needs assessment unit before dawn each morning, your dollar seem to buy less and less at the supermarket each week, homes are being lost and gas prices are still killing us.

      As the writer of the viewpoint asked, what are you going to do about it?

  5. Anonymous says:

    Excellent letter.

  6. Ron says:

    Sorry ole bud. You are a caymanian so no concessions for us local people. Only the rich under the disguise we will get work, yet unemployment on the rise and no locals still not at the ritz. Btw when can we expect payment of the $6M owed to the people? Does minister archer knows how many people $6m can help?

  7. Anonymous says:

    If you look I believe we have one of the highest fuel duties in the region. A cut in that should cut the cost of living in general. Just look at the fuel duty on your cuc bill.

  8. Anonymous says:

    Your strata is not paying a “garbage fee”. They are paying to rent a skip and have it emptied. Multi-unit residential properties equate to a commercial property. I would also say that the figure seems high for a single emptying per week. Maybe they should shop around with the private contractors. Competition is a wonderful thing.

    • Anonymous says:

      The townhouse complex where I live has strata fees of CI$450.00 per month and has a skip for residents’ garbage. This skip is emptied twice per week, which is excellent service.

      • Anonymous says:

        6:46 pm @ 16/10: you are sort of missing the point — the quality service or even value for money is not being necessarily questioned. The point is, on the premise that the 2 percentage point duty increase was introduced as a way to compensate for lost fees from residential garbage collection, residential garbage should be removed free of cost for stratas In line with govt policy for individual homeowners.

        Stratus are not commercial but are residential properties. And by the way, even if you wanted to excuse dropping condo complexes from being covered by the 2percentage point deal, you simply cannot justify it on any argument — 1. It is more efficient and therefore cost saving to empty a couple of skiffs than to collect garbage from 30 to 40 individual bins; 2. The expat/Caymanian argument can’t hold as I am willing to bet that there are as many Caymanians as expats if not more living in condos; 3. In any case, everyone has to pay the 22% duty, so there can no no basis for discrimination.

        It is simply wrong to charge for garbage collection from residential property — it is simply taking advantage of the fact that stratus are going along with the practice.

        • Anonymous says:

          Do not lose sight of the fact that this Government reduced the duty from 22% back down to the original 20% in 2014. The policy reflected in the garbage collection charges for strata lots has been that way for a long time.

    • Anonymous says:

      Stratus pay DEH.

    • Anonymous says:

      4:22 pm at 16/10: for one, why should “multi-unit residential properties equate to a commercial property” — sounds as if you quoting the definition applied by government? The point of this piece is why should that be so? On your other point of paying “to rent and skip and having it emptied”, I can accept the fee for renting, but “having it emptied”? That in reality translates to collecting the garbage — that is covered under the said two percentage points.

      I agree with the original writer, it is wrong to levy this charge on stratus and cannot be justified in all fairness.

  9. Baer Faaks says:

    Comeuppance? Nah. Never happen. That’s Caymankind.

  10. anonymous says:

    Well, I guess now we know where the surplus came from, seems the government has been really squeezing us while playing innocent the whole time and selling foolishness about economic growth and stable finances.

    Don’t suppose we’ll see balancing the budget on the misery and suffering of the locals as part of the next manifesto. Progressive indeed, fooled me once bobo, won’t fool me twice

  11. Anonymous says:

    Do you know for sure whether the strata is actually being billed for this and paying it to the Government? My experiences with Stratas on the Island has been a nightmare! At time the mismanagement is just beyond shocking, and it is not unheard of that some have used Strata’s cash as their own personal slush fund.

    I am not saying this was the case here, but I would certainly investigate this more closely!

    • To tell you the truth says:

      Not to get off topic but you are right, we have some shady people on some of these strata committees, we get our management done independent of the owners and that at least gives me a little more comfort

  12. anonymous says:

    I have to say I completely agree, I live in a strata complex with 42 Units and they charge us the same 8,500.00 that works out to over 200 per unit, even when the Government was charging private households they only paid 150. What’s the rationale here? is it because they think that it is only expats living in these strata complexes or is it because no one has ever complained?

  13. Anonymous says:

    Good for you. Good viewpoint.

    But duty was raised by 2 “percentage points”. In most cases (from 20% to 22%) the increase was 10%.

  14. Fearnot Ebanks says:

    Once the magic cruise pier is built all your troubles will dissipate instantaneously and there will be free garbage collection for all.

  15. Anonymous says:

    I understand the sentiment on the fuel prices but you need to continue the calculation a little, if those 31 gallons sell at an average of CI 4.50 (US 5.50) the total value of those 31 gallons at the pump is CI 139.50 / US 170.50, of that USD 29 is tax, the rest, US 140.50, goes to cover the cost (US 46 in this example) and profit, that leave US 94/ barrel unaccounted for, which between the transport, distribution and sales goes somewhere at some % for each. Whilst Government takes US 29 the rest take US 94 per barrel, and thet US 29 goes towards paying for schooling, roads etc, the US 94 goes into collective pockets.

    Think of it another way, if the barrel cost, after fees, is US 75, that works out to US 2.42 per gallon, (CI 2.02), how do we get to CI 4.50?

    • anonymous says:

      Try not to confuse the issue, the local supplier does not pay $75 for 31 gallons of fuel because they don’t buy raw oil, they buy the refined product which obviously has a markup for the refinery.

      The comparison to the barrel of oil was only used so there could be an apples to apples comparison of what every one watches i.e. the price of oil on the world market, and how the CIG tax adds to that price factor.

      The viewpoint is illuminating though, I never thought of it that way

      • Rick says:

        I could buy refined oil at a retail pump as a petrol product such as high octane gas at US$2.00/gal (read CI$2.00 to account for change from US to Imperial gallons). I could then transport it to Cayman and sell it for $4/gallon and still make a profit. It will cost less than US 20c/gallon to transport that gas to Cayman. Add 40c/gallon for other handling costs and you still make 65c profit off each gallon, assuming government tax of 75c/gallon.

  16. Anonymous says:

    Answer from Government Minister: Sorry but this is not an issue on the top of government’s agenda. I’ll only help friends and family by waiving stamp duties and placing them on boards. I’ll tell you what though, vote me in next election and I PROMISE I will work on the cost of living for you and maybe some of your family members.

  17. Anonymous says:

    Should definitely change fuel duty to a percent of the import price, not a flat rate per gallon. Then gov would know what’s going on pricewise.

  18. Anonymous says:

    The cost of groceries, electricity and gasoline in the Cayman Islands is a shocking disgrace. As long as the big government boys get their massive paychecks, all is well.
    I hope I see you all get your comeuppance, because it will most certainly happen.

  19. Knot S Smart says:

    Excellent Viewpoint!

  20. 18 Holes says:

    The politicos are too busy bending over to give concessions to wheeler dealer development speculators and are not interested in your issues.

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