Revenue rolls in to public purse despite pandemic

| 12/11/2021 | 94 Comments

(CNS): The government continues to collect near record-breaking revenue, despite the stalled tourism sector, as stamp duty, import taxes and financial sector fees roll in to the public coffers. Despite the additional spending to deal with the direct and indirect costs of the COVID-19 pandemic, the current operating surplus is higher than expected at the end of what is normally the worst performing quarter. According to the third quarter results, the government currently has a surplus of almost CI$103 million, some CI$7 million more than anticipated so far this year.

When the PACT government came into office, the new finance minister, Chris Saunders, predicted bad news on the horizon for the public purse. Instead, even though spending is higher than ever before, the revenue being collected is easily outpacing that spending, keeping government firmly in the black.

The third quarter between 1 July and 30 September was a high earner for government. Compared to the same period in 2020 it increased by a whopping $180.2 million, and even though spending was up by more than $93 million, the overall net surplus for the quarter was a surprising $70.7 million.

“Coercive Revenue recorded for the period was $87.7 million more than budgeted expectations and $183.9 million higher than the prior year-to-date (2020) actual results,” the report stated.

The positive change to the budget was mainly due to the $51 million collected from private fund fees, a new unbudgeted revenue stream from the registration of these funds that came into effect last year, and duty on land transfers of $51.1 million based on the massive volume of property transactions going on in the Cayman Islands.

Even though government is missing an estimated $42.5 million from tourism revenue during the third quarter, it collected a total of $193.5 million, which was $56.9 million higher than the previous year.

Total expenses for July through September were higher than costs recorded during the third quarter of 2020 by $47.6 million, and across the nine months they were $93.2 million (16%) higher than last year. The bulk of the spending went on transfer payments to workers and businesses impacted by the pandemic as well as public health spending.

But despite the loss of tourism earnings and this additional public spending, government coffers are fuller than expected, with cash in the bank and a net debt ratio well within the limits set out in the Public Management and Finance Law.

As a result, the government continues to maintain what many countries would consider an enviable buffer against the current stormy economic times. At some point, however, as the general public continues to bare the brunt of the pandemic with inflation and growing inequities, government will be pressed to spend more on dealing with the cost of living for ordinary Caymanians.

But the officials were still wary of getting too relaxed even with the very healthy surplus, given the unpredictable nature of the world economy at present.

“While the third quarter’s performance has positioned the government to be optimistic about its performance for 2021, this will be greatly impacted by the continued economic effects of COVID-19 expenditures and fall-off of tourism related revenue and local economic activity due the extended closure of the borders,” officials said in the report.

See the full report in the CNS Library.


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Category: Government Finance, Politics

Comments (94)

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  1. Anonymous says:

    Is this voodoo or santeria accounting?

  2. Anonymous says:

    As I read these comments, it seems as if non-Caymanians feel that they run Cayman’s FS and that they look down on Caymanians.

    Cayman is for Caymanians. Keep thinking that way. It won’t be long before 2025 is here. Change is coming.

  3. Anonymous says:

    Ban the polluting cruise industry. Cayman does not need it!

  4. Anonymous says:

    Thank you to the accounting firms for getting the Private Funds Law passed and the Mutual Funds Law amended for the less than 15 investor funds.

    NO THANK YOU to the law firms for opposing this at every step.

    Sorry Oxbridgers, you lost. And not quite the doomsday the senior partners at the two largest law firms predicted? The exact opposite.

    • Anonymous says:

      Across the 14,000 funds registered with CIMA, it’s around $50m per year into the collective pockets of our local audit industry. No wonder they were so keen on passing it, and inserting the mandatory local audit provisions that even the EU weren’t insisting on…

      Still, it has kept the lawyers busy so doubt they’re complaining too much.

      (No, sadly I’m not a lawyer or an accountant…)

      • Anonymous says:

        CIMA wanted the mandatory local auditor too. It wouldnt have been possible for CIMA to deal with hundreds and hundreds of audit firms from 50 to 60 countries. It wanted to limit this to locally resident auditors. Wouldnt have worked otherwise.

        Your $50 million per year number is a bit light. It was probably around $70 million incrementally in annual revenue, and when combined with the existing “sign off/reissue” book, brings this well over $100 million per year for Cayman audit firms for “sign off/reissue”.

    • Anonymous says:

      You have made this comment previously and it is misleading. We are in a world of cheap debt and heightened asset valuations, which has caused everyone to try and launch a new fund and realise investments. The record number of formations this year is driven largely by this fact and obscured the other fact that a number of other previously significant users of this jurisdiction are no longer setting up their funds here. When the economic cycle invariably dips, we (the jurisdiction) will no longer be able to fall back on its previously reliable clients. Some of us are seeing the funds and entities that previously came here that are now set up in other jurisdictions. Every Caymanian is poorer because of it.

    • Anonymous says:

      Thanks to Alden McLaughlin and his Government for having the good sense and judgement as well as political strength to go up against the large law firms and others who fought the imposition of a fee. It was the right decision for the country despite all those saying it would ruin the financial services industry.

  5. Anonymous says:

    The longer picture is Govt needs to find a way to reduce the cost of living, primarily health insurance. The simple fact is that in the next 10-15 years there will likely be a significant exodus of primarily expat status holder workers (as well as born & bred Caymanians with options) reaching retirement that they’ll find they can no longer afford to live here. It’s already beginning to happen and these aren’t minimum wage people either.

    • Anonymous says:

      Technologies will continue to change who needs to work from here…

      Govt to focus on quality of life

    • Anonymous says:

      I’ll be soon among that migration too, it’s simply a better quality of life across the pond. Sadly Cayman has priced itself out of the market for the common mortal, Caymanians included. Those who have tasted better elsewhere know Cayman has and will have little to offer, it’s all take and no give for the taxes we pay out . Besides you simply have to be either corrupt to the core or be independently wealthy here to survive.

      • Anonymous says:

        Probably won’t be too long before the obligatory ‘don’t let the door hit you on the way out’ pops up – the difference seems to be (as suggestive in your case) that this time around many are planning their exit, that’s a significant difference from the before ‘I’ve had enough’ crowd

      • Anonymous says:

        Taxes? What taxes? We pay duty, which is comparable to VAT across the pond, but no income or property tax. And fees and stamp duty, yes. But you are mistaken if you think the gov’t takes from the commmon man.

        • Anonymous says:

          Nonsense, indirect taxation is the main source of government revenue, we pay huge taxes in import duty, work permit fees, transaction stamp duty on everything we buy. We pay a lot of tax in cayman as an average resident. It’s just indirect not direct taxation, you pay huge tax every time you shop in fosters.

  6. Anonymous says:

    Sovereign wealth fund?
    Miller Shaw?
    EY.

    We have plenty of money. Our government and civil service just squander it.

    • Anonymous says:

      Zero Bitcoin.

      Cayman Islands should immediate allocate 10% of its annual funds into Bitcoin.

  7. Anonymous says:

    Excellent news. Now let’s permanently prohibit all cruise ships with the possible exception of a very few ultra-high end ‘expedition’ ships that carry no more than 250 people arriving each week. That would probably increase the financial contribution of the cruise sector to our economy and limit the disease, pollution and disruption that cruise ships currently bring.

  8. Anonymous says:

    I wonder if the government is engaged in some creative accounting. Also, whatever happened to the unfunded pension and healthcare liabilities?

    • Anonymous says:

      Unfunded pension is getting dealt with via inflation… Don’t worry about that by the time most are due you won’t be spending dollars or nobody will really need them. They’ll be tokens for paying tax 💎😂. And most ppl not going be paying much traditional tax in the meta verse

  9. Anonymous says:

    …. and so, which tourists are we re-opening for again? Oh, sorry, the hotels and condo guests, watersports guests, restaurant clients, transportation….etc. If they return!!

    Government needs to reinvent it’s revenue streams. Regulate ganja and numbers and keep the $$$ here!

  10. Anonymous says:

    This is all the private funds law really. Just shows how valuable the expats in the FS industry are. Would be great to get more caymanians having strong careers in FS and funds but so many leave as they won’t do the 7am to midnight, and working weekends, hours required.

    • Anonymous says:

      I am a young caymanian (well paper i guess moved from the UK) and do this. Not everyone!

      But yes, alot of young caymanians are not built for hard work!

      • Anonymous says:

        Yes, young caymanians are a disappointment. On paper, many of them have attended great universities and achieved good grades, but they come with too much baggage. It’s almost as if they enjoy spending time with family and friends, attending graduations, birthday parties, weddings, even funerals! Having ethics and morals may make them feel good about themselves, but there’s no place in top-management for anyone who may shed a tear over the failings of another, or if they’re not willing to commit themselves 200% to the company. At least until they get a better offer from another company. Now if we could only teach some of the young drug dealers how to do this work. On second thought, they probably earn more money than I do for the same amount of hours.

      • Anonymous says:

        Some expats are not cut out for it either. There was this one guy in the office whose wife started giving him stick about not spending more time with the kids. It’s like they never heard about boarding schools. Anyway, one of the kids got sick and he started going home early, so I took up the slack and now I have his job. I wouldn’t be surprised if his kids aren’t calling their mother moooma instead of ma’am.
        This same guy would do crazy stuff like volunteering more than required for PR points. Our company makes a big fat charitable donation every year so we don’t have to skip Saturdays at the office. I’m like, what’s wrong with you dude?

      • Anonymous says:

        We have an older caymanian in the office that’s not too bad. He always comes to work on time, never calls in sick, but you can set you watch by him leaving at 5pm. Not sure exactly what he does, but it behooves me to say something nice about him since he signs all of the letters of recommendation when our staff apply for caymanian status and PR. His connections getting us work permits is probably worth ten times whatever we pay him.

        • Anonymous says:

          Lucky dog. As soon as I qualified for PR I asked a woman in the office to sign my letter of recommendation (and I knew her by name) but she refused saying she didn’t know me that well. Maybe her $400 Christmas bonus helped her get to know me better.

    • Anonymous says:

      I just don’t get why anyone should have to work 7am to midnight plus weekends. Don’t you people have a life outside of work to live and families who need you?

      • Anonymous says:

        He’s we do, but the 7am to midnight p,us weekends and public holidays is really only for January to June. And you can get to senior management positions in cayman if you work a bit hard like that and earn a good salary for cayman. Remember it’s less hours in cayman than New York or London. In London a lawyer just out of university in a big London law firm as a graduate usually sleeps in the office quote often and can expect a 95 hour week, but they do start on 105,000 pounds a year salary aged 23.

      • Anonymous says:

        This comment is why caymanians can’t hold down the well paid cayman jobs in financial services. Refuse to work hard. Same for the hotels. And you complain that expats take your jobs!!? Get in the real world

        • Anonymous says:

          This comment is why the world is in shambles now. The planet is literally burning alive and all these “lawyehawers” care about is how well they look in a suit.

          Food shortages, crops diminishing but, as long as they have order in court the chaos outside the walls don’t mean shit to people like this.

          Detached from reality.

    • Anonymous says:

      I work in the industry and I won’t work beyond an additional 5-7 hours a week outside of my contracted hours. Hire enough staff, keep the staff efficient. Expecting people to forgo their lives outside of work is toxic.

    • Anonymous says:

      You cant paint them all with the same brush. And some people have families or personal lives. Its not fair that you have to work a million hours and weekends. When you are on your death bed you never would look back and say, damn I wish I worked more.

    • Ex Pat fed up with the way Caymaians are treated in their own country says:

      BS there are many hard working Caymanians in the FS who are trodden on by ex pats getting status and promoting their own people. Many of them come here without a clue and are in high positions without a clue relying on or bullying Caymanians to get ahead. I have been in the FS for over 40 years and know what I am talking about.

      • Anonymous says:

        Well said.

      • Anonymous says:

        Agree. Works both ways. There are some excellent well-adjusted expats and Caymanians in the FS industry, and terrible examples of both as well. Like everything in life it’s a mixed bag.

    • A bit concerned says:

      Caymanian in the FS industry here! I bust my a** just as hard as everyone else (if not harder). In fact I find that they pile more work on me just to see if I’ll crack! Working yourself to the bone should not be the norm or the expectation for anyone! Plus I’m being paid at least $40,000 less (but probably more than that) than those that are being brought here with no previous funds experience etc. Plus if you consider the fact that Caymanians have their entire families here (not just kids and partners) and a much bigger balancing act with that work/life balance. Most people more here by themselves or just with a partner so their time isn’t as stretched and they hold out until their vacation. Caymanians shouldn’t be made to feel like crap for not wanting to sacrifice time with our families when most people are coming here for a quick buck and a good time and to get that PR. Either way – work/life balance should be everyone’s and every employer’s goal! Not working to death!

      • Guido Marsupio says:

        You are sadly correct. The last time work-life balance was “in vogue” in the business world was in the ’80s. Since then, and it has gotten worse over time, businesses have chosen not to consider employees as “stakeholders” and the profit motive is all that matters. I’m not defending this, in fact I disagree with it, but it is the way it is if you are an employee. I feel sad for the younger folks who are just starting their careers. You need to do what is right for you and your family, and that’s a hard decision. Maybe move to Europe? They do somewhat better with WLB there (6 weeks summer vacation in many countries and it is actually taken). Or start your own business? I know that can be hard but I know of successes, too.

        • A bit concerned says:

          Not to worry! I don’t intend on going anywhere (at least not permanently). Why should I have to leave my own country where I should be able to live a successful as well as fulfilled life? I will put in the work and put up with the s*** as I’m not afraid of the challenges or the BS. I will work and I will save and I will progress one way or the other. I may start my own business down the line. Everything will work itself out in time.

          • Anonymous says:

            I am sorry to read all this. I never knew that was the case in the FS industries. Many other companies are the same – and I have worked in several countries. One thing is for sure, and it has been done before – if you start your own company remember your employees. I have many a story about a group of friends leaving to start a new business and treating people with respect (not over working as well) – and those companies sucked all the talent from the monsters and surpassed their old employers in leaps and bounds.
            Good luck – it was a fine day when I could tell a employer “I am leaving.”

      • Anonymous says:

        Apply for a job at another firm there are others out there – that will pay top dollar for a hard working Caymanian. I know because I’ve worked at them. I’ve also worked at a couple firms run by Oxbridge elitist snobs. But both kind of firms are out there.

    • A bit concerned says:

      A lot of expats have left as of late because they don’t want to put in the 7 am-midnight. Literally said they were making themselves sick and their family life was suffering. So I guess not all expats are built for hard work either! Or maybe the mentality of overworking yourself needs to change.

    • Anonymous says:

      This is one of the results of the work permit system. Those here on permit in the FS and similar industries know that if they don’t put in more effort an hours, WITHOUT ADDITIONAL REMUNERATION, their contract will not be renewed. And because of the permit system red tape – they have almost no option to move to another company – which takes away a primary incentive of companies to have working situations that are appealing. When you have the employees by the permit, they either do the extra or find their job going away.

      I know the permit system was put in place for good reasons, but it was poorly designed and created a worse situation because of it… seems to happen a lot.

    • Anonymous says:

      Flawed perspective. Local law firms discriminate against Caymanian attorneys.

      What happens, when a Caymanian attorney that is capable of doing the Partners jobs, is that the Partners get scared of losing their position and do everything they can to get rid of the young Caymanian attorney.

  11. Anonymous says:

    Why not give all seniors a Christmas bonus(excluding civil servants and all that have received government stipends and not just those on voting list) that have been living on 1,000 a month, have paid their dues over the years and not received an extra dime over the past two years but still paying same price for food, utilities as everyone else.

    • Anonymous says:

      Because that’s not how the world works. You don’t just hand people money for nothing. Now a facility for the elderly, thats something completely different. And it’s well needed

    • Anonymous says:

      I believe the NAU payment is $975 and we who have pensions get $1,000 pm. No one can live on that. The monthly pension amount needs to be raised or give people the opportunity to get some as a lump sum so they have a safety net.

  12. Anonymous says:

    It is time to reimagine our tourism sector. What we had before the pandemic was not mostly of benefit to Caymanians or the local environment.

    • Anonymous says:

      Absolutely right!

      Unfortunately I am not sure that is within either the self-interested mindset of the people that ‘influence’ our politicians to do whatever those ‘influencers’ demand.

  13. Anonymous says:

    Public sector bailing out the government

  14. Hubert says:

    The time has come to give the people of the Cayman Islands a cost of living break.

    A cut of 22% to 15% on all imported products is now due.

    Give us a cost of living break NOW.

    • Anonymous says:

      A cut in prices surely you mean.

      A cut in the import duty rate simply means increased profits to those businesses that will simply continue to gouge its customers.

      • Hubert says:

        There can be no cut in prices while there is a 22% duty on all imported products.

        Prices cannot possibly be cut because businesses have such high overheads here for everything from energy costs to rent.

        It is foolish to think that all businesses are gouging customers.

    • Anonymous says:

      5:57 pm. The problem with custom duty breaks , they NEVER passed on to the consumers , only the business people makes bigger profits. THATS HOW IT GOES IN THE BRAC FOR SURE.

  15. Anonymous says:

    Great news, lets get some more give away programs going and the waiving of fees for the foreign developers!

  16. Anonymous says:

    I do hope the Civil Service remembers to send the private sector a thank you card when they get their bonuses.

  17. Anonymous says:

    The thousands of caymanians who lost all of their income from closed borders are more important that the pigs (government) feeding at the trough (stealing tax revenue)

    • Anonymous says:

      With this money they should build some post secondary education centers. And some adult learning centers. Real ones, not small all over locations.

    • Anonymous says:

      “Thousands of Caymanians”? Thousands of Jamaicans, Filipinos and Indians you mean.

  18. Anonymous says:

    That’s good to hear, but this is owing to private equity registration fees and overactive land transactions.

  19. Anonymous says:

    Come Biden’s minimum tax rate, Cayman will be broke

  20. Anonymous says:

    PPM Left us with a very strong economy, nobody can deny that

    • Anonymous says:

      This is completely true and not deserving of the downvoting. Income is sticky and takes a while to come into the coffers. Whatever is happening now, and likely for a while longer was the previous administration doing despite what you think of them.

  21. Anonymous says:

    Ssshhhh. More people might start to realize we did not have to kill people to have a functioning economy and wider society.

  22. JTB says:

    …in spite of CIMA’s efforts to eradicate the financial services industry

    • Anonymous says:

      CIMA is so pathetic and a tyrant. Continually moving the goal posts, not giving clear guidance but then fines and puts excessive pressure on financial services companies for requirements they give wishy washy responses but quick to hang when they don’t approve of companies trying to keep up with the goal posts changing continually. Response to cima should be 1) you draft clear guidance for all financial services companies onus should be on cima 2) 3 simple words until that comes: F Off Cima.

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