Minister has no data on impact of concessions
(CNS): The finance minister has admitted that no research has been done or data collected justifying the continued duty concessions on building materials in Grand Cayman and a host of other waivers on Cayman Brac. After delivering a statement in Parliament last week renewing various import and stamp duty cuts due to expire on 31 December, Roy McTaggart was unable to tell his colleagues if these cuts had achieved their goals or if any of the price reductions had trickled down to consumers.
Answering questions from the opposition benches about the statement, specifically on whether or not the concessions were passed on to consumers or if they had stimulated the Sister Islands’ economy at all, the minister said there were no mechanisms in place to see if prices were being reduced as a result and government merely hoped the savings trickled down.
MPs also voiced concern that the hiked prices on the Sister Islands were far in excess of what could reasonably be expected as a result of the additional transport costs to Cayman Brac and Little Cayman, where gas prices were said to be hovering around $8 per gallon.
McTaggart undertook to have his ministry examine those costs, after revealing again that no research has ever been done to see how much more the residents on the Sister Islands are being charged for goods under the guise of the cost of bringing the stuff from Grand Cayman.
In his statement McTaggart told the House of Parliament that since July 1996, government had been offering a range of duty concessions “to stimulate and encourage economic activity… particularly the Sister Islands of Cayman Brac and Little Cayman”.
But although these had been in place for almost 25 years, he said that it “remains inconclusive” whether or not they have had any impact on the economic growth of the Sister Islands. McTaggart said this was due to other factors challenging the economic development on the Sister Islands, such as “lackluster population growth”.
“In 2019, it is estimated that the population of the Sister Islands increased by 1.9%, or 42 persons, compared to 2015 when the last evaluation was conducted. In 2018, Cayman Brac’s per capita GDP was estimated at 32.6% of that for Grand Cayman. Given this very substantial income differential, a uniform rate of duties for the sister Islands and Grand Cayman will be regressive or inequitable for those in Cayman Brac,” he said as he announced the continuation of the waivers.
These included a 100% import duty waiver on building materials imported to the Sister Islands, a 100% waiver of stamp duty on land bought on Cayman Brac, as well as a 12.5 cents per gallon cut on import duty on all gasoline imported to Cayman Brac. The minister also reinstated the flat 15% import duty rate on building materials imported to Grand Cayman.
But despite having no supporting data to justify the decision or any goal in mind, just a broad hope that it might help, McTaggart said government was not only renewing the existing duty cuts but was adding more as a result of the “continuing economic plight of the Cayman Brac economy”.
The additional measures for Cayman Brac include cutting all duty on gasoline to the island and a cut of 100% in the duty on imported household appliances, such as refrigerators, dishwashers, water heaters, pumps, washers, dryers, ranges, cook tops and ovens, as well as a 3% stamp duty on the purchase of property already built on Cayman Brac.
The renewal and additional package of concessions will become effective on 1 January.
Category: Government Finance, Politics
these people really give away millions of dollars every year just on the word of wealthy person/corporation saying they will give something back eventually. and some people have the nerve to run around talking about independence.
Don’t know, don’t care?
So all the Bull$#!+ about needing to give concessions to get something back in turn is completely baseless as they havent GOT A CLUE what we have gotten back in return!!!
You cant make this $#!!+ up. Nothing but incompetence. WTF
Duties cut on the Brac is NEVER passed on to consumers. it only makes the merchants make bigger profits
A disgrace.
It’s quite a feat to make the independent member from Northside appear to be the most sophisticated, and responsible choice for the next four years. I can’t even believe I just typed that. <>
How can a sitting Finance Minister not be intimately aware of the day-to-day cash position of his area of remit? Is Roy’s admission disqualifying, negligent, or both?
If you vote for these people again, you deserve what you get. Country is sold piece by piece without anything to show for it.
Are you better off than you were 8 years ago with all this construction around?
Cayman needs time to digest everything that has taken place over the last decade. We are already seeing the signs of indigestion all around us (traffic, crime, poverty) yet we insist on shoving more developments and project down our throats thinking that we will eventually achieve Eden.
One day, too late, we will realise we already had Eden many years ago and are now no better off.
“If you can’t measure it, you can’t improve it.”
Peter Drucker
I ask for a full assessment of all duty waivers in Grand Cayman, Little Cayman, Cayman Brac to determine if the CIG have received value. Has the average resident benefited from these waivers, and is yes, how.
In an ideal scenario, this report would be ready a month before election day.
The people deserve to know.
The OAG needs to have a look at the disgraceful granting of waivers to Davenport for the Vela devp.
Kurt Tibbetts and all the rest of PPM just gave away 100k’s of public money by way of waivers for a development that didn’t need it to go ahead. Just padded the pockets of Davenport. Disgrace.
Ministry of Finance a joke in this area. Ken Jefferson, Mathew Tibbetts and Micheal Nixon have done nothing meaningful to tackle oversight of this area, preferring to let other entities take the blame .
Lazy approach to a serious matter – just giving public money away.
Bless his heart!
I’ve never seen a situation where developers are salivating and competing so much over one area, yet government is giving them concessions for some reason.
It should almost be the other way around. Developers should pay extra for the privilege to develop, especially on SMB. Doesn’t make sense.
Shouldnt be that difficult to determine how much Morritt’s Resort for example has benefited over the last 25years, not sure might be 30years since construction began. Health City, I’m sure has already surpassed and exceeded by the services it provides to the Cayman Islands any concessions which the government gave, the services provided there are priceless, so kudos to UDP government that made that happen!đź‘Ť
Good God Roy.
Roy sounds almost as useless and stupid as Joey and Alden with that response.
What have the politicians and civil servants that negotiate these deals been doing all these years? Where are the minutes of the meetings? Where is the professionalism, accountability and transparency we should all expect from the leadership of the Cayman Islands. This is either negligence, incompetence, malfeasance, corruption or all of the above. This totally unacceptable. Maybe it’s time for the U.K. to take care for a few years and steady the ship as the crew are all lost at sea and drunk on power.
Truly the blind leading the blind
Is there anyone, ANYONE in the LA who is competent at their job? Not ONE of these chancers would last 5 minutes anywhere else in the civilised world. Quite incredible stuff.
Government had been offering a range of duty concessions “to stimulate and encourage economic activity… particularly the Sister Islands of Cayman Brac and Little Cayman” ???
Why bother?
Was only last week they Brackers were looking to stop development there for the Dagarro airbase. They have so far cried foul on developing more hotel / tourism beds, adding a golf course on the bluff and shut down plans for a medical school…
Reality is they don’t really want any growth or development and seem content to watch the next generation of youth leave one by one for GCM. Only folks profiting from the concessions are the foreigners who are building homes and importing their food and furnishings weekly.
The people of Grand Cayman need to stop supporting the Brackers. Gasoline costs twice as much there with less duty. Their own are ripping them off.
Brac’s welfare system and total government costs should not exceed what is received in duties and fees from the Brac. Controversial I know, but that is what happens in the real world
11:01 am explained this. It seems counter-intuitive but they made sense.
5:39 pm, you are right Brackers are ripping off their own, Beackers can buy materials in Grand that dutable and ship iT to the Brac which Is duty free and save money. Duty free in the Brac is only costing Government to lose money and make the business merchants richer. For everything that ls sold in the Brac duty fee things are never passed on. They still charges and passes along the 20 % duties to the consumers
Vote buying and cronyism at its best for those “special interest persons/companies”! Sad…
Just another version of the Nation Building slush Fund
Look at all the new ones clambering to get on the voting register to keep these in!!
Only thing it does it put more net income in developers pockets. Many better ways subsidies could be used.
Certainly is not making the price tag cheaper that’s for sure.
In order to do proper research, you’d need to know how many cans of beans each shop sold per month and at what profit margin. Markups are meaningless without knowing the volume of sales. Business 101.
Then repeat that for 10292 other items. Then examine each business’ financial situation to determine if such markups were justified. This is assuming the businesses are willing to disclose their inside business info, which they have no legal obligation to do so in this case. There were no agreements to do such a thing when concessions were provided.
After providing duty allowances that increase profit margins, of course, one has to consider the effect of economies of scale.
Even if the profit margin is double in the Brac, 10x the volume can be sold in GCM, so prices can be lower here despite being dutied.
This is why Walmart can operate on paper thin margins (2% markup), yet would fail in LCM. $8 a gallon sounds ridiculous (200% markup) until you factor in overhead costs that have to be covered selling 100 gallons a week? Even at $4 profit per gallon that’s only $400 in cashflow per week, then salaries, etc. Sell 1 million gallons a week at 4 cents markup is still $40,000 cash flow.
Figures were pulled out of my a$$ but the logic is solid from my brain.
Cashflow is actually all of the money (including the profit) but your point is still there. When one can sell a million gallons a week, even a fraction of a percent markup can still be a sustainable business model. Certainly not for small population operations.
11:01 am, remember if the Brac is not selling the volume then they don’t need to hire the many staff either, so overhead cost is cut
Impact is simple to determine.
Survey the increased profit margins for the likes of AL Thompson Home Depot, Edgewater, etc
These concessions are not passed on!
Have you seen the increased prices in AL Thompson’s in the last several months?
10-20% in past couple months. In some cases, still not updated on shelf tag. You just get hit at the register. Also, barely any discounts left for small contractors and now everything requires $25 delivery. Altee mustve found a way to take his $$$ with him.
Slow your roll there people. Google “lumber prices 2020” and you will see that since April 2020, lumber prices have increased 130%. Local suppliers have no control over this.
Go to Home Depot website and in Miami, a 2x4x8 PT will cost you $5.98. From A.L. Thompson website it is $6.50. Hardly price gouging IMO.
Try educating yourself before making negative comments.
So (based on current exchange rates) gas is now a lot more expensive in the Cayman Islands than it is in the UK! LOL, who would have expected that?
Please tell us how much per equivalent gallon in CI$ in the UK?
Hope is not a strategy.
Impressive……Meanwhile exactly what is the statistics office doing if the Finance Ministry doesn’t have the data?
Anyway, why not just ask the Tourism Minister what the hike in prices actually is versus the costs of getting goods there.
I won’t hold my breath.
What about concessions to the big developers such as Dart, HHG, Davenpourt, Michael Ryan, ent?
Even less important to collect data on, that might be telling that it’s only for “perks in kind” or kickbacks from grant recipients to a “special” few. The only concession that’s going to end anytime soon is the one ordinary people can take advantage of. What does that tell you?
So much for data/evidence driven decision making
Such a disappointment