Work permit system too complex to be efficient

| 19/10/2015 | 20 Comments
Cayman News Service

Acting Auditor General Garnet Harrison (right) and Martin Ruben, OAG Performance Audit Principal

(CNS): The Cayman Islands Department of Immigration collects more than 11% of the government’s entire revenue, well over $70 million per year, but the Office of the Auditor General (OAG) has raised concerns that the overly-complex work permit fee system is undermining its ability to collect money owed. In the latest report from the OAG examining the management of public cash, the auditors focused on collection rather than spending and found a number of weaknesses. With the immigration department, the system itself was considered a problem.

Efficiency could be improve by cutting the amount of time and resources it takes to collect immigration-related fees with a simpler structure, the auditors said.

With 5,000 different permit fees, which are specified by occupation, by island and by industry, the complicated system makes errors and mistakes more likely and has prevented the department from moving towards a more administrative decision making system for granting permits and away from the politically appointed boards, as well as undermining its ability to enforce and administer sanctions.

“Administering work permits would include ensuring that those in the work force have an active work permit, and those with an active work permit are employed in the profession and industry indicated in their work permit application,” the report found. “Simplifying the process could also lead to better administration of work permits, which could lead to more effective enforcement and the collection of potential fines.”

The OAG found that immigration grants permits for jobs that are not even listed, illustrating the impossibility of capturing every possible job. For example, although there is no such occupation formally listed, the department was granting permits to caregivers based on the specified job of a domestic helper.

Acting Auditor General Garnet Harrison said the defective system could be improved if occupations were categorized with a list of several related occupations.

“Decreasing the number of occupations and fees specified in the legislation could make the process simpler. A simpler process would allow for the swifter processing of work permit applications and thus improve service to the public,” he said.

With such an inefficient system prone to allowing errors, the audit office has recommended that government review the framework for work permit fees, streamline the structure and reduce the opportunity for improper recording of revenue collection information and other risks.

Each department determines how they collect revenues and the auditors warned that there were risks surrounding the lack of overall control to ensuring the public purse was getting its full amount. They also warned that once again the risk management systems of falling short.

See OAG report: Collecting Government Revenues

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Category: Government Finance, Politics

Comments (20)

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  1. Anonymous says:

    Sometimes when impertinent or drunk types ask me what I “do”, I lie. The times I’ve been caught out are when I said I was a Village Idiot (too much local talent) and chimney sweep. I wonder what the permit fees are for my other trades:

    mobius rubber band developer
    algorithm specialist for extraterrestial radio signals
    bounty hunter
    ice sculptor
    professional yodeler
    organ harvester
    body double for Ken Dart (since no-one knows what he looks like)
    data collector (spy) for Christian fundamentalist church

  2. Grim Reaper says:

    The work permit regime is a major component of our fee based taxation system.

    Interestingly, or ironically, depending on how one views these things, the rest of the world (and the USA and UK inparticular) is enthusiastically embracing the fees for services model, as their traditional revenue models are no longer paying the way.

    But people need to give up on the idea of govt effectively regulating employment. Or anything, for that matter.

  3. Caymanian donkey says:

    Mr AG, its not complicated, all I do is leave a black cheque and have them complete it for me, its great becuase one year I pay $2k for a yr and the next $750 for the same person… Saved 1250 this year. I love their system…

  4. Just Sayin' says:

    We will need another 3500 work permits once the magic cruise piers are built.

  5. Anonymous says:

    The fact of the matter regarding hiring expats over Caymanians is that expats are willing to do the work Caymanians are not. Why else would an employer choose to pay the fees and go through the severely uneducated and lazy bunch of people that work for the Cayman Islands Immigration department? No section of immigration knows what the other one is doing and responses when trying to contact them for information are a joke. Given that they are the governments highest earners, you would think they would have a far better, more streamlined process. Sadly not. **excuse my spelling you grammar monkies, I wrote this on my phone while waiting for an express permit to be approved for the last 3 months for an employee.

  6. Anonymous says:

    This attests to the fact that Government depends heavily on revenues from Work Permits. As such, it is not in Government’s interest to reduce the issue of same, thus not politically expedient. Until this flawed revenue model is revised and supplemented by some other form of revenue (except higher taxes), this system will remain the same and will justify the unwillingness of some to offer opportunities to Caymanians. Government is supporting broader unemployment of Caymanians – sad but true!!

    As for revenue-earning or expense-reduction options to supplement the coffers: legalize lottery, collect a small commission for every international financial transaction, decriminalize possession and growing of small amounts of ganja – are just a few worth exploring.

    • Anonymous says:

      I’m sorry but this is total bol**cks.

      Do you honestly think the board members personally give a damn about maximizing government revenue? If your conspiracy theory held water why would they ever decline a work permit (which I can assure you they do whenever they get the chance).

      It just doesn’t make any sense.

  7. Anonymous says:

    I thought it was meant to be difficult and expensive to try to hassle firms into employing second raters.

  8. Shhhhhhhh. says:

    One or two thoughts. Firstly, when they scaled the fees according to job position, management, supervision etc., all that happened was that companies altered their job titles downwards, and have “Operations Supervisors” functioning as C.E.Os etc to avoid the onerous fees. Squeeze the toothpaste hard enough and it finds a way, and that is a lesson that our leaders need to bear in mind. Whenever taxation, or fees become too burdensome, the economy reacts by distorting or morphing, and still avoid the excessive fees while Govt spends even more on enforcement. NOT efficient.

    Fees and taxes etc must be tolerable and affordable and spread evenly, then we do not contort, morph, or act dishonestly to avoid them. The private sector always wins this match and the sooner that Govt. learns the better.

    Secondly, how about making work permit fees a percentage of the salary catergory? That way, when someone gets a salary rise, it has to be reported, and the appropriate fee adjustment made. This would avoid the “fraudulent” job titles game, and pin immigration permit income to the total job market value of permits in the economy. The person paid would have to be worth the percentage fee attaching to the permit and not be earning a six figure salary as an “Operations Supervisor”.

    Thirdly, the system has been tinkered with too often and for too long by authorities with honestly good intentions, and the result is a complex, wooley and gray area’d mass of confusion. Any system that is overly burdensome to the private sector is going to fail because it is simply “Bad for business”, and business is what pays the Govt what it needs to operate. The problem is, when will this principle ever be learned?

    • Anonymous says:

      Fully agree, except that Government should keep out of to much salary detail or it starts to look like income tax – and anyway, people will simply change the way they are paid.

      • Anonymous says:

        A common belief, but nonetheless flawed. The flaw in this argument is that employers wouldn’t get employees to apply for, let alone accept, jobs based on some work-around form of non-guaranteed remuneration.

        In order to attract candidates in the first place an employer has to advertise the job. No one will apply if the “salary” is not attractive.

        In order to get an applicant to accept a job, an employer has to make them an employment offer (i.e. a contract) which outlines the terms. What employee in their right mind would accept an offer that does not guarantee them a salary?

        Yes, some very senior people (owners and part-owners) might use some workaround, but this would easily be accommodated in the regulations by allowing immigration officers to impute a reasonable market salary where there is good evidence someone is underpaid (due process for all parties notwithstanding).

        This is not dissimilar to the current system where immigration can impute other job titles upon an employee if they think the job title provided is too junior.

        Any system will be gamed by those affected. The more complex it is the more likely it is to be gamed.

    • Anonymous says:

      …and of course the practice you refer to, although widespread, is a criminal fraud, results in artificial advertising, deprives local persons of opportunity and is exactly the kind of thing many Caymanians are rightly upset about.

  9. Anonymous says:

    I guess you all would like if there was no immigration so you could bring every friend and family member here, not going to happen.

    • Anonymous says:

      That is not the point. It is in part because the system is so broken that it is possible for people to bring every friend and family member!

  10. Anonymous says:

    Isn’t this working the way it was planned?

  11. Anonymous says:

    bloated, inefficent….sums up the civil service perfectly….

  12. Anonymous says:

    Well, tell us something we don’t know…only good thing is someone might read this and work out that they losing income as well as probably shortly going to lose lots of legal cases…

  13. Anonymous says:

    Why did they stop at the Work Permit System? The entire law has become an overly complicated and unenforceable farce.

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