79% call for stamp duty increase in CNS straw poll
(CNS): The policy U-turn by Premier Juliana O’Connor-Connolly on a proposal to increase stamp duty in areas with a high concentration of luxury development, such as Seven Mile Beach, is not supported by the majority of CNS readers. According to the results of a straw poll posted here last week, 79% of those who took part believed that the Cayman Islands Government should increase stamp duty in one way or another.
While the poll did not define “luxury property”, more than one-third of the 500 participants thought the CIG should increase stamp duty on such properties in all areas for non-resident owners. While only 21% thought there should be no increases at all, 16% said the increase should only be in designated areas for non-resident owners, 15% supported increasing duty in designated areas for all owners, and just 14% wanted to see it apply to all owners of luxury property in all areas.
More than 100 comments were submitted by CNS readers on the article, with the majority of those who took time to express their opinion favouring an increase in duty, especially for wealthy non-Caymanian owners, given the impact on local infrastructure of over-development of high-end property destined to be sold on the international market.
There is a growing concern that the continued development of luxury property by developers sold on the open market is pushing up all real estate prices beyond the reach of local families. It is also fuelling population growth as more and more work permit holders are brought in to build and service condos and hotel projects. But these are then sold to foreign owners, bypassing any benefits to local people but leaving them facing the costs and inconvenience of traffic congestion, over-subscribed schools, the hospital at capacity, and over-crowded supermarkets.
The premier announced the proposal during the budget debate in December as one of a number of potential new sources of revenue for the government, which is seeking to raise an additional $130 million to meet operating expenses over the next two years.
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Category: development, Local News, Politics
There also needs to be action in each MPs district, and nationally.
Any wide poll would demand the new Minimum Wage, Traffic Mass Transit, formation of non political District Councils etc.
Curious how many think our government should transparently keep track of the billion that they are already responsible for collecting, follow procurement laws, follow best practice recommendations, poll the electorate on policy priorities, and report true finances? Or is that all just too hard? Is it easier to give them more and more of our money to play with, to waste, embezzle, and fritter-away on vanity projects? How about tracking the finite duty and guest tax waivers to major billionaire developers? Too hard?
I think most importantly divorcing couples with one the wishes to retain an existing property will need to pay stamp duty again once a spouse is removed. Apparently the Cayman Islands government has placed itself directly against divorcing couples and wishes to exact a pound of flesh from families already in distress. Kiss little Mikey’s college fund goodbye.
The government seems to want to kick people when they are down and double tax people who find themselves in this most unfortunate of circumstances. This is a great shame and shows the true colours of the people in power.
To foreign investors, beware to ensure your have proper legal structuring to avoid this punitive and destructive tax. For many it is already too late.
I did not know that this is a think and how this is even legal. Both parties already share the ownership of the property therefore stamp duty has already been paid, even if one is removed. I am not disputing that you are incorrect, I am questioning the legality of double charging for stamp duty when there is no ownership change, just an ownership forfeiture
In a divorcing couple situation this is exactly how this will be applied.
I surmise this law was not enforced previously due to it being completely unfair.
Going forward marrying couples will need to ask themselves is joint ownership the best course for them. They may have to forgo a family home and instead downgrade their residence to maybe buy two properties in sole ownership.
It is perceivable there will be cost to society.
People staying in unviable relationships, simply do to a mismatch. Or people staying in abusive and toxic relationships. Essentially the government is taxing divorcing couples. Many societal costs to this enforcement.
It is too late for people already married to make plans for this but the unmarried will need to consider this double tax.
And I suppose the “love and affection” provision for waiving transfer tax would in these cases be considered, an Oxymoron.
It is not logical to increase the duty on SMB property. In reality you are just placing that property further away from your own attainment. But hey, good luck.
Yeah, we are really concerned about pricing ourselves out of property that we already will never be able to afford, owned by people that would never sell it to us. 🙄
You sure out a poor mindset and outlook on your life. But if you are a Government worker I guess that would make sense.
I think I would probably have voted yes to increasing the stamp duty, but then it’s pretty easy to vote for someone else to pay the bill…much harder to vote yes if it impacts you! Real estate development used to carry a lot of risk and it was probably justified to give import duty waivers and the like, but unless you completely screw it up these days there seems to be an awful lot of profit in doing so. Realtors and developers and presales buyers all getting very rich off these properties, not sure targeting the end buyer to pay for this is the right part of the chain, or the only part to focus on.
Maybe check your assumptions against stats. Inventory is not exactly flying off the shelves these days, even on new construction. It seems like 79% of surveyed don’t understand how frail this market is, and the concurrent impact on ALL home equity holders, including Caymanian.
The realtor, developer and posh owner cabal has entered the chat
Whatever…but the fact remains that our bloated government needs the income from development, transfer taxes and employment opportunities that flow from it.
Eliminate that income stream and God forbid our MPs and civil service won’t get their annual pay rises.
it’s pretty easy to vote for someone else to pay the bill…
Very true, but what most people don’t realize is that once government has grown accustomed to living off the money they get from other people, government becomes addicted to what they were doing with that money. If for any reason whatever, foreigners no longer wish to purchase or own property in Cayman, government will then turn to us to make up that revenue loss.
So true, so let’s continue to bash the foreign money until it leaves (or drastically goes to friendlier shores – with sand) and then cry when our economy collapses.
companys (Reality)selling land/ buildings should NOT get anymore tha 5 % max. profit. They are the ones pusing up prices and getting rich.
The uber wealthy may seem like a majority with the influence and power they have, but in reality, they aren’t.
We will be fine.
Big Money rules Cayman, as we have no taxation.
MP Saunders was removed as Minister for daring to remove the Temporary Work Permit – a major tool for labor abuse, and easy slave labor imports, most at $4.50 hourly.
The next day that policy was reversed!
This luxury tax is needed badly, and will be introduced somewhat to share the heavy dept pie.. but it will cement their control over government which is dependent on it to pay civil service salaries.
That was not the reason he was removed. Stop this deliberate misinformation.
BS. He was removed for being subversive.
Ask Saunder’s staff why he was removed.
Whatever the reasons, it was a good decision to sideline this dangerous man.
Uturn for a reason, Real estate must only go up, if needed we will borrow and cut stamp duty and cut duty on building materials from 15% to nil. we will drain the pensions, whatever it takes.
Think about what happens if they don’t? Unfinished buildings, large unemployment,tumbling property values and lots of debt supporting these price levels. It must be defended at all cost, even if Cayman must try & fight the Fed.
Drink too much?
but then they woukdnt be supporting the rich! ha ha ha…zzzzzz
Taxation repels capital, which in no small irony, is why Cayman exists. Many countries have introduced “foreigner” taxes in an effort to quell market prices, but it doesn’t work, because it doesn’t restrict the capital of domestic speculators and money launderers, and we have both.
Tax the rich? The horror!
Take a page from the UK where it regards stamp duty on property. If a prospective owner already holds property anywhere in the world they pay a higher stamp duty as the new property is regarded as a second home. If a prospective owner is not classified as a citizen then they also pay an additional higher stamp duty.
Maybe the time is coming to reduce the stamp duty and bring in an annual tax on property that is not the residence of the owner? This could apply across the board. These people are running a business for profit without a license. Other business owners pay an annual license fee so why not these “business’ owners.
Change the zoning. Allow more density, add reliable public transit.
This should not actually be so difficult.
Time for Johnny come lately to pay Cayman not just non residents all non Caymanians this onslaught needs to stop Cayman ! Pronto Live and direct !
Home equity, where many households put the bulk of their net worth assets, is not as stable or liquid in the Caribbean these days. The forward-looking outlook is not great. We may find that taxing those same buyer segments, that we have been so far relied on to prop our market, and support bank-secured values, will backfire on ourselves. We will pay one way or another, while the preferred developers, churches, schools, agriculture, monopolists, and SEZ bandits enjoy full CIG duty waivers.
The commercial sector shouldn’t be getting a free ride on 20 year duty waivers, exploitive land swaps, and rebates on 10% CIG guest taxes, especially when successive administrations are not bothering to keep track of the drawdown on finite dollar values, or supervising and enforcing the deliverables to residents that formed part of those originating contracts. Government performance gaps and policy shortfalls should not be taken out of the hides of private residents and voters a second time. That doesn’t make any sense.
Non Residents should definitely pay more stamp duty. This can offset stamp duty for Caymanians. Remember that most nonresidents purchasing property here are wealthy and won’t even be fazed by a duty increase. A lot are using these properties to avoid taxes which would far exceed the extra stamp duty costs. As the old saying goes “you pay to play”
Stamp duty should be as below
LOCALS (For unlimited properties)
0% up to $500k
2% 500k-$1m
4% over $1m
NON RESIDENTS
5% up to $500k
7.5% $500k – $1m
10% over $1m
Add a requirement for legal documents to all developments to declare if they are intended for VRBO and Air B&B and make them pay up for it since they are very much responsible for rising rents.
If property is not inhabited by the owners for at least 90 days each year, penalize them.
Lastly, require insurer and bank confirmation of awareness for commercial use.
No duh. Unfortunately, developers and real estate agents line the pockets of these politicians so it will never go through as they are scared it will impact their gravy train.
Same way that foreign developers (which are backed by real estate investment funds) are granted duty waivers to …. ensure they get the best ROI when selling property to other foreign investors.
It is truly unfortunately that this higher tax was never implemented. Caymanaian land being sold to foreign developers building and selling property to foreign non-residents. This stuff should be taxed far, far higher than a Caymanian resident, but it isnt.
Price concerns are not a valid excuse. Simply lower the price of the property if they are concerned about tax. That would obviously impact their ROI, so they dont care and would rather lobby politicians.
Anyways, end of rant. Pointless now as the amount of development has surely peaked (ie, population increased so much that it cannot continue at this pace going forward).
It should be based on wealth not nationality.
Colour me surprised. You’d have derived just as much value by asking “do you think everyone except you should pay more tax”
And you’d have got the same expected result. Roughly how many people live in areas likely to be caught out by the government’s definition of “luxury”? Say 20%. how many people think those people should pay more tax? About 80%. Who’d have thought it…
Government needs to create alternate streams of revenue, instead of milking the same old cows!!
Regulate marijuana!
Regulate numbers gambling!
Require 0.05% of every single off-shore banking transaction to be paid to Government!
Put a 10% surcharge on Honda Fit importation, licensing & insurance!!
We should have 2 types of work permit fees for construction workers. The work permit fees for non-resident developments should start at $10,000 for an unskilled labourer, $25,000 for a skilled labourer and go up to $50,000 for a manager. That would increase government revenues and would shift development more to development for residents.
An alternative with a more immediate effect on slowing down the development of property for non-residents would be to charge developers an upfront infrastructure fee of $1000 per sq ft payable before the development could start. Such an infrastructure fee would offset the negative externalities these developments produce for residents.
Are you then assuming that the CIG would use these ‘fees’ logically? That is a poor assumption based on the history/expertise/ethics of our ministers. We elect clowns – they use our money for balloons, cotton candy and suckers.
So if someone is developing a 1,000 sg ft house. You’d like them to pay $1m before construction starts…
Great idea let’s do it! I’m sure the cost of housing will come down immediately.
The original post says to apply the infrastructure charge for development for non-residents. I agree with the idea if the infrastructure charge is applied to developments of more than units.
They already collect infrastructure fees for anything requiring a building permit. The problem is for over 20 years now, those funds go into general revenue. Our infrastructure is lacking because all previous governments have failed to earmark dedicated funds and actually keep up with development.
Imagine the sheer nerve of 80% of the people that want these developers and investors to pay the infrastructure costs of their investments.
Real estate development on this island has gotten out of control. Foreign developers hiring Jamaican expat labor to build properties that only wealthy non-residents can afford, while being granted duty concessions and coastal setback waivers. It has been said for decades now. Who is benefitting from all of this development? Bullshit promises of “jobs for Caymanians” that never materialize. There is no (or very little) trickle down affect. What do Caymanians get out of it all? Increased traffic, intolerant foreigners, and negative environmental impact. That’s what we get.
Thank you CNS. You are appreciated.
JOCC is going to raise that missing130 million on the backs of working class Caymanians. In a recent CNS article she was quoted as “hearing the cries” against the stamp duty increase. That cry could have only come from the elite developers and the wealthy puppet masters of the current cabinet.
At some point, the government will have to stop pushing their own historical problems off. You made your bed..
These MP’s are failing us regular folks miserably but never fail to look after the wealthy. Just disgusting!!
It’s a no-brainer. Wealthy people come here and buy properties. Sometimes, they rent those properties. Other times they stay in them themselves. We all have no problem with them, however most of us think they should pay for their privilege. We don’t get to share in that privilege.
It’s pretty simple: If you come here from elsewhere and intend to make money off the properties you buy, the people/government should be allowed a cut of that wealth. That is the case almost everywhere else in the world, so why not here?
It’s a no-brainer.
AirBNB, VBRO and the like, are already supposed to remit 10% guest tax to CIG.
Should be raised to slowdown the short term rental industry, which will lower rental prices for residents.
It’s 13% and VRBO and AirBnB don’t pay it. The licensed properties pay that.
Bet their insurers have no clue that they are basically insuring a hotel instead of a single family dwelling.