Premier U-turns on luxury property duty increase
(CNS): Plans to increase stamp duty on luxury properties appear to have been dropped just a few weeks after it was suggested by Premier Julianna O’Connor-Connolly. The possibility of increasing stamp duty was raised in parliament in the UPM leader’s budget address in December, with the implication that the new government was considering raising the duty in locations such as Seven Mile Beach, where many of the condos are sold to overseas owners. But on Friday, O’Connor-Connolly told a business audience that it was under reconsideration.
“We have heard your cry,” she said at the Chamber of Commerce Economic Forum. The decision to walk back the proposed luxury tax would not put the new government’s revenue predictions for 2024/25 in jeopardy, she stated, maintaining that other revenue measures the government was rolling out would bring in the additional $130 million it needs to meet operating expenses over the next two years.
The premier told the audience that the idea of increasing stamp duty was being shelved during a question and answer session following her main address. The Q&A was held with past Chamber president Shomari Scott.
When she suggested during the budget meeting that the government was considering the hike, the premier provided few details. However, CNS understands that the proposal would have seen the current rate of 7.5% grow to 15% for those very expensive condos on beachfront property around Seven Mile Beach, which would have had little effect on Caymanians other than the small number of local millionaires.
There were also indications that the duty hike could have been limited to overseas non-resident owners, making it a popular way to increase government revenue without causing inflation or hurting local residents.
At the Chamber Forum, O’Connor-Connolly did not say why the UPM was making the U-turn on an idea that is gaining traction in the community as a way of curbing the acquisition of luxury beachfront property by overseas investors.
The increasing number of low-paid foreign workers needed to build and service these high-end developments is putting an enormous strain on the local infrastructure, which means the government must take on expensive capital projects to alleviate the pressure. Many believe the high-net-worth individuals who own them should be taxed to cover these costs.
Given the lack of details that have been made public about the proposal, it’s unclear who would have lobbied successfully to stop such a proposal other than developers of high-end properties and the realtors who are selling them.
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Category: development, Government Finance, Local News, Politics
Who’s surprised of the U-Turn by CIG? Not me for sure!
How about an annual property tax like they have in other places? Can be targeted to high value, foreign owned property. Will raise government revenue and might even suppress no local value development (i.e. condos no one here but a handful can afford). Doesn’t solve government misspending money but that is a different topic.
I guess Juju suddenly realized where her fat salary comes from.
Why?Why? Why?
Why is the CIG so afraid to tax the rich. These people in Cayman not because the care about the Cayman Islands’ people, culture or overall well-being. What the rich care about is the fact that their properties bring in that over sweet tax free Cayman Dollar when they sell or when the rent their properties. Both situations, these rich people laugh their asses to the bank and behind close doors and in some cases, laugh publicly.
The rich is gaining their grounds in turning Cayman to their rich playground while the average hard working Caymanian and redident is drowning in debt because the cost of living in Csyman continues to go out the roof.
Shush about the Realtors who sell these high end properties. Whether they have PR or Status, they too do not give a flying fart about Cayman. Their concern is the almighty tax free strong Cayman Dollar that they deposit in their bank accounts from the lucrative commissions they receive.
The Premier and every single other politician are spinless. Their heads are so far up you know where the rich decelopers and properties owners that the couldn’t see the light of day if their lives depeneded on it.
Stop selling Cayman out.
Tax, Tax, Tax the rich. If you think that others will not follow if one or two or three pullout of Cayman, there will 7 or 8 coming to take place even if they are taxes.
There already are taxes, on everything one acquires or consumes.
Post-COVID real estate is soft EVERYWHERE on the planet. The last thing Cayman should want to do, is destabilise the local household savings of residents by triggering an international fire sale. This is a special kind of Brac-grade stupid.
Pray tell which average Caymanian would be affected by this?
“This is a special kind of Brac-grade stupid.”
Go SYM with your disrespect. People like you need get kicked straight back to where you came from.
How about: the CIG should not be selling or gifting public Crown Land to developers, with 20 year duty and tax waivers, without also tracking (to the penny), the accruing draw-down on value limits within those special terms, enforcing the agreement obligations and conditions on behalf of the public, and expropriating the land and withdrawing incentives in the case of overt dishonesty, and/or non-performance. eg. Neither the Governor’s Office/FCO, or CIG is supervising performance on the NRA Agreements, and it has cost the people of the Cayman Islands hundreds of millions of dollars in real property value and forfeited taxes. Even Roy McTqggart, as then Finance Minister, admitted a few years ago that the Unity/PPM weren’t even bothering to keep track. That is theft.
so there has to be more ‘Chamber of Commerce Economic Forums’ scheduled to find out anything that this new Govt is doing/not doing, ‘there’s no ‘T’ in UPM
There’s nothing wrong with charging non-residents and/or foreign investors extra to invest/purchase here.
The only objection is based on fallacy and greed – its a ‘fear’ that charging more MAY prevent inward investment. It’s not actual. Its a supposition.
If you really think that the mega wealthy worry about another few %’s, you have either no idea what you’re on about OR more likely, you’re a realtor fearing you’ll lose a few commissions.
None of these objections have Cayman’s interests truly at heart.
The condos on SMB are already sold, and the cost of redeveloping most of them is prohibitive. So, CIREBA you’re already taken your commissions on original sales and ‘questionable’ assignment sales that dont get registered for stamp duty, do try to back off and let the country seek to survive.
The development needed is not on SMB, its everywhere else, and its for the full time residents that are not in the top 0.5% you fear may not come if taxes are raised. And this development is in full steam and continuing.
The development you fear losing isn’t going anywhere, there’s very little SMB development coming in the next 10-20 years – way too expensive without 20 storeys and even then, few people want to pay $35M for a condo among 200 units.
BTW – going to 15% of course seems a bit steep, doubling residents costs. But 10%? why not? And also a 2nd home owners annual levy. Its done everywhere else.
And CIREBA should be subject to government oversight, its clearly in breach of consumer best practices and fair practices – its a cartel as someone noted elsewhere here, you’re locked in, CIREBA agents go out of their way not to listen to non-CIREBA interest on properties, and there are various lawsuits globally and even here where CIREBA style practices have been clamped down on.
Tick tock
The is no need for any new taxes. Merely impose current taxes. Many very large developers are receiving a waiver or exemption on import duty for building materials. When most of these large developments are being funded by multi-millinaires or billionaires, why are we furthe rining their pockets with duty waivers? There profit margins are significant and enhanced by the duty waivers (which by the way are not available to small developers or individuals). When a devloper is making over a $100 million profit on large high end develoments, they do not need a further 20% bonus on their profits. Added to this is the government spends millions on surrounding infrastructure, they are actually spending more then what they receive.
This. Even Roy McTaggart while Finance Minister for Unity/PPM, proudly announced they weren’t keeping track of the finite diminishing waiver values. There should be arrests.
Poor people cant pay you so No tax for the RICH! SOUNDS GOOD!
People are reacting like there was a decrease in duty. All that happened was a consideration of a duty increase and deciding not to go forth with it. You havent lost anything.
Didn’t gain anything either. Pay up.
accept we are loosing. When these rich developers are given so much while paying little or nothing back to the communities who do you think has to take on the burden?
Its OUR money that subsidizes these projects, we are the ones having to struggle as cost of living goes up, we are the ones that feeling the strain when import duties go up because CIG needs money.
So yah, we are loosing because of this. The millionaire devolopers gain at the cost of all of us.
It’s my my my money and you can’t have it. So there.
Are they rowing back the change in stamp duty for divorcing couple too? As things stand on the 1st March people will be paying 7.5% SD on property THEY ALREADY OWN.
It appears no. They government has lost its mind. This is going to be a killer for divorcing couples and any children in the family. It seems the government has firmly positioned itself against the people in this situation.
they need to tax the divorce because they need to close the tax evasion loophole e.g. think prenuptials and post nupital agreement to circumvent the stamp duty via the matrimonial or civil union process. The tax man cometh
The government has too much money already. It is wasteful and arrogant and needs to be seriously reigned in. It is not properly planning or investing for the future.
Cry, developer-real estater-investor
This is infuriating! The average Caymanian can not even obtain a piece of land in their own country!!
Not because wealthy foreigners are buying condos on the beach. Politicians are placing blame in the wrong place.
WORC granting permits to all, DCI granting T&B’s to all, Jon Jon leaving minimum wage embarrassingly low, for everyone, and mainstream education standards being far too low, are all much more impactful.
You cannot be serious. Anyone with common sense can see the concrete buildings going up everywhere.
These are not for the average person.
Who is building them?
Who is furnishing them?
Who is maintaining them?
Who is servicing them?
Answer – hundreds of “average” people – who would not have jobs (or housing) if not for the high end properties on SMB.
No Caymanian couldn’t buy a house because an American spent $5 million on a beachfront condo, ever.
Check the world. Everyone’s in the same boat, not just Caymanians.
The average Caymanian can and has obtained property(look around you fool). The average poor, uneducated, and very loud and lazy Caymanian never will. Unless they get elected.
Comment of the year! These lot out here partying every weekend, taking trips, paying car notes, etc. How can most of them afford the deposit for a mortgage….
If you increase the stamp duty that a buyer has to pay if they purchase my apartment then the amount he can pay me is lowered. in that case I’ll just never sell and keep the rental income instead for myself and my kids after me.
Good for you if you can afford a multi million dollar condo.
Of course she did. Can’t upset their wealthy developer friends.
So much for Miss Julie stopping “government by remote” that she attributed to her predecessor. She is a complete fraud using religion as her shield.
Spot on!
I didnt expect anything different from Jackie-boatside JOCC (should be both-sides), she does a flip-flop every 3 years.
She should be the next one to get a knighthood, afterall she has ousted 2 sitting premiers (McKeeva and Wayne)
This UPM budget was a sham from the start. I hear some ministries are already submitting Supplementary requests for additional money since early January 2024.
“We have heard your cry” They are not the ones crying!!
Flawed logic even proposing this. Stamp duty is a transaction tax, incurred each time there is a transaction. Raising a transaction tax from 7.5% to 15% is simply going to result in less transactions (as with any tax, Economics 101).
With 15% duty plus a couple percent of closing costs etc and a an eventual exit selling commission of 4%, a buyer is in 21% to 22% capital loss on day one.
There is a tipping point to how much one can raise a rate until the actual total revenue raised with a higher rate is less than that at a lower rate. We will simply have less transactions.
Oh no! The poor real estate lobby!
Try reading carefully – the posters point is that a rate increase may potentially result in the government receiving less tax revenue. I think they are wrong and the demand for property is fairy inelastic i.e. the number of sales would decrease by less than the percentage of tax increased, but its a reasonable point. Sure the realtors will get hurt by any reduction in volume as their commission ignores the stamp, but the diminishing returns on transaction tax is a well understood concept. And whilst dont expect many will shed a tear for realtors or developers, bear in mind that on anything other than a new build an increase in stamp is highly likely to reduce the value received by the homeowner selling their property.
Boo hoo. These developments and their buyers need to pay for the infrastructure costs associated with their investment.
Stop taking from the average Caymanian through the general fund.
They do. Look up the infrastructure fees associated with these buildings. It’s very high
They do. I wrote a six figure check to CIG for “infrastructure fee” to get the occupancy permit for my house. The issue is that the fee I paid goes into a black hole and is not earmarked for infrastructure. The common thread in all these comments is a failure of vision and policy by CIG.
Demand is not inelastic. In the 1990s in the United States, the government put a luxury tax on yachts thinking that demand was inelastic. What actually happened is people stopped buying luxury boats, and the boat building industry was decimated.
https://boatingindustry.com/blogs/2022/02/01/the-luxury-tax-myth/
Orcas know best
This line of thinking in terms of capital gain and loss is the whole problem with the speculative nature of the Cayman market. But there isn’t really much else to invest in here unless you give 60% of the investment to a Caymanian, so I get it.
Btw your interpretation of Economics 101 does not seem to fully comprehend a supply and demand chart.
Some fair points, but raising one-off property taxes on nonresidents (or non Caymanian/non PR holders) should be considered. There is a balance to be struck. Building and selling US$2m+ condos on SMB does NOTHING for local residents….they lie empty for vast tracts of time.
How about the realators giving up some of their stratapheric fees as well, to soften the blow?
It beggars belief that realators on this small island are world leaders in their respective firms for sale dollars…other than they get by far greater commission per centages than their peers elsewhere in the world.
We are bending over in complete submission as we contnue to be pummeled: Thank you mam. May we have another?
Good to see Juju isn’t really in control of anything. I was worried for a few minutes.
Clearly someone got a spanking from the big hand of daddy dart.
And Frank.
…and many others!
Guess she wouldn’t be invited to dinner at the fancy restaurant!
“We have heard your cry”?
No one at the Chamber of Commerce gave two sh*ts about increased stamp duty on high end Seven Mile Beach condos.
This was a classic piece of misdirection. A smokescreen for her colleagues in thrall to developers.
how about less taxes gererally and reduce the bloated inefficent civil service and wasteful cig spending generally!
read miller-shaw or e&y reports!!!!!!!!
That would be a good start but we need revenue to improve our infrastructure and taxing the wealthy non-residents and developers is also necessary.
The Cayman government has an annual revenue of over $1 billion for a population of under 100,000. They should be able to manage infrastructure development on that, but they squander the money. To say nothing of jow they have failed the manage the population growth that has generated the pressure on the infrastructure.
Strawman weak
Strawman fluff.
Nice strawman you’ve got there. Shame if anyone debunked it.
I supported this concept at first but made my own u turn on it recently. It’s got nothing to do with politics really. Quite simply once government raises taxes on anything, they will spend that money and get used to it. Then they’ll need more money and look to raise taxes on the next thing. It doesn’t matter if we let them do it with luxury homes thinking that’ll be the end of it. Once they spend all that, they’ll go onto the next thing and the next until they get to all of us.
lmao dude really dropped the “First they came for the ultra-wealthy, and I did not speak out—because I was not ultra-wealthy.”
( https://www.amnesty.org.uk/files/2019-01/First%20They%20Came%20by%20Martin%20Niem%C3%B6ller_0.pdf )
Pull your head out of your ass and give it a good shake.
The CIREBA cartel and wealthy foreigners have spoken and got their way. Threats of leaving were enough.
After all, why tax the wealthy who threaten to leave if you do when you can slip in new taxes for the locals that are tied to being here… You watch, there will be more smaller increases on us to make up for this.
The foreign investor knows they are on to a good thing. The cartel is on their side afraid that if they do leave, which they won’t, they will lose their golden goose.
Grease up Cayman, another round of you know what is coming for the little man….
Bullseye 🎯
Not only should stamp duty for foreign buyers increase, but we should limit ability of foreign nationals to buy, similar to Bermuda and Canada.
And IF we don’t limit their ability to buy, we should institute a non-resident property tax – whereby if you don’t live here at least 6 months of the year in your property, you have to pay a non-resident property tax. It would be a drop in the bucket for the millionaires and billionaires buying property here as an investment or to flip.
We need to do away with the property requirement for residence – or increase the value. Low and mid range inventory is scarce, as bought up by expats seeking PR and this has driven prices up – mostly pricing Caymanians out of the property market in our own country.
Cayman is the best run country in the Caribbean. However, the current laws and policies makes it too easy for people to come here and buy real estate especially at the mid range levels and believe they are entitled to PR and Caymanian Status. Foreigners that do not permanently reside in Cayman should have to pay a 4% property tax annually. All that is required is a change in the laws.
The most entitled people in Cayman are those that come here and try to change Cayman to suit their culture and what they left behind in their mother country.
This expat agrees
Bullseye 🎯
Are you mad? The real estate industry would crater overnight, and tens of thousands of people would be out of jobs. Who else is going to buy multimillion condos on Seven Mile Beach than foreigners. If you want to see what happens when crazy laws get passed, have a look at places like Venezuela where the oil seeps out of the ground and they don’t have the ability to pump it out and process it.
Cue the world’s tiniest violin
The expat who purchase property as well a higher stamp duty or annual property tax until their PR is processed. After all they are culpable for the infrastructure, traffic and property woes.
No expat wants to change Caymanian culture. It’s what makes you all so easy to get along with. It’s also what makes sure most of you will never be a threat to anyone in the job market. You might want to think about that for a moment before you get mad at anyone but yourself.
Tax all those that land-bank. Ken Dart for starters. How many acres (or thousands of plots of land) does he have tied up strangling the supply of the local market?
I give up. How many?
I dont think he even no
Did he steal them? He bought them from other Caymanians! What did the Kirkconnell’s do with $70 million from the sale of Royal Palms? Build affordable housing? Your own people are selling you out, stop griping about ex-pats.
Why not both?
anyone who is holding more than a couple of acres (would support exepemption for inter-generational land transfers still held) should be taxed if they’re doing nothing with it.
CIG don’t have the big kahunas for that. Where is that guy btw.
Sooo…. build more and more, so we can afford to build more so we can afford the additional expats required to service those luxury construction projects, at a detriment to the local infrastructure and resources?
Pretty much the same plan as we’ve been using, isn’t it? Sure wish I could make my budget by spending more.
The only downside to raising property taxes for non residents is the real estates agents might not much make as much commission. Residents get a fair go at buying at realistic prices. Do it Ju Ju!
CIREBA
That’s it.
A cartel.
It needs to be regulated and commissions slashed
They have no problem making $250,000 each on a sale of a condo for a few hours work…but we can’t charge higher tax rates to help the country.
It’s not hard to work out what’s wrong here people.
CIREBA has the highest rates of any country in the world (that I can find) and we have some of the most expensive homes in the world. So these guys/girls make a killing for doing no work and taking no risk. Time to end that once and for all.
Kind of like the CI Government and stamp duty.
Bullseye 🎯
Plus increase the work permit fee for agents. This job takes no great skill but the income potential is equivalent to a top executive. Make the fee equivalent.
There is also no guaranteed income. That is why Caymanians won’t do it.
Go back to tending bar.
Bullseye 🎯
Leverage this when it’s still possible. Cayman has lost itself and is no longer going to be desirable in the longer term.
If I had enough money to buy at one of the high-end properties, I’d be taking my cash to other jurisdictions. The Golden Goose is in terminal decline. Traffic, corruption, higglers, crime, infrastructure…
They leave and stop moaning!
My friend, that’s the plan. After 20 years of working here (all community development roles), I’ll definitely be leaving.
I’m not moaning, just pointing out the truth. I feel for those with no real option to relocate.
This was flawed, elementary logic to begin with. “Let’s just double the rate and we will double the stamp duty revenue!”.
Well if you double the rate and cause demand to drop by more than a half, then you actual raise less total revenue.
Option E:
If your land and property exceed a certain value eg $2M KYD, 0.5% annual tax that is used to subsidize affordable housing developments.
You can afford it big shot. Many others can’t.
Better yet, fundamentally change the system that permits the import of foreign labour to build luxury properties for non-residents. Thousands of rental properties would immediately be freed up, rents would drop, the infrastructure would work better, less crime. Win, win, win.
2 mil isn’t that much these days
However, there’s no turning back on the fee increase for Commercial Airline passengers, which will fund building the Private Terminal.
Anything that’ll ruffle the feathers of the rich won’t be done, but the backs of the locals will be broken to accommodate them! Disgusting!!
Caymanian kids can’t get a spot in government school, and most of their parents can’t afford Private school fees!! Why doesn’t govt legislate that a certain number of spots in selected private schools be reserved for Caymanians at the cost of the government, since they wanna help!
If this Govt( Rebranded PACT minus Panton) implemented a law in quick fashion to ban feeding wild chickens, they can actually try to help Caymanians as they claim!
Cayman for Caymanians Eh!!! Garbage!!
There will be plenty of spots at the new school in the Brac!
The chicken comment is great, too. How many people have been prosecuted thus far? another rule that isn’t and won’t be enforced.
She heard the rich people cry but to hell with the Caymanians and others who are suffering. Just goes to show you that money talks and bullsh*& walks. Those people whoa re paying these exorbitant prices can certainly afford some more tax but this government in all their wisdom caved in to the elite.
If her lips are moving do not trust her even behind her mask
Evergreen.
“CAYMAN GONE”: CLOSED-DOOR DECISIONS AND FOREIGN INVESTORS DRIVE AN ISLAND IDENTITY CRISIS
As real estate booms, Caymanians question who their islands are building for.
January 26, 2022
https://periodismoinvestigativo.com/2022/01/cayman-foreign-investors-identity-crisis/
Only silver lining in this report is , thank the CIG dragging its feet to spend the $25 Mil on sand for the Marriot & southern end of the beach.
That sand would now be on its way down the wall past the Carrie Lee.
If they decide to implement the increase for non-resident owners, I hope they ensure that a non-resident cannot get around it by simply creating a Cayman based legal entity and making the purchase through the entity. If I had to guess, they won’t close that loophole…. it’ll look effective on paper, but won’t do a damn thing.
The honourable members best learn not to bite the hand that feeds them!
Some politicians are fed much more by the development cabal than the outrageous amounts that they loot public coffers.
This group of rookies didn’t think twice about bowing to their new leader to build a completely unnecessary $60 million dollar school in the Brac for 151 student.
But alas, how will they pay for it? Easy, just hike the stamp duty for rich people. Right! Until their secret plan was foiled by those doom and gloom economists who told them what would happen to the market with a hike in stamp duty moving to 15%. It was already done years ago and the Cayman Market collapsed. Ask any realtor!
Not to worry, the rookies still have the answer to balancing the budget for their wild spending. Borrow $400 Million, which is what they just did in Dec and they approved all the new borrowing in Parliament.
UPM = Under Pact Management. Same old same old, Mac running the show and gambling this country away with his puppet JuJu following instructions. The answer is not leaving massive debt to our children!
The real estate industry collapsed?
Give me an effing break Slowing down is not a collapse.
We need to prune this real estate industry, it is out of control making foreigners rich and creating problems that Caymanians have to suffer with, and pay for.
Judas-anna refused to increase the stamp duty for foreign buyers. Told the Chamber she ‘heard their cries’.
What now?
Things that make you go ummmmm….
1.Foreign buyers know buying Cayman property is a good investment. No annual property tax. No tax on money made renting your property.
2.Foreign buyers buy property to get PR points.
3. The very rich foreigner buys property in exchange for a 25 yr residency certificate and no work permit fees.
4.Foreigners often buy properti6es in cash.
5.Foreign buyers get better treatment at local banks.
6. Foreign buyers have been driving up property prices out of reach of Caymanians for years.
7. Fifty six (56) LCCLS given for property development between 2017 and 2020 = foreigners outnumber Caymanian developers.
8. Many developers are foreigners.
9. Majority of real estate agents are foreigners.
10. Real estate developers spend big on political campaigns.
11. Real estate developers spend big every Christmas time too.
The writing is on the wall. Foreigners mean more than Caymanians to this Government. Foreigners and real estate developers mean more to Progressives and UPM than Caymanians.
Caymanian voters – how many of you think the stamp duty for foreigners should have been increased?
– A Caymanian Voter.
Absolutely agree.
Bullseye 🎯
How does the new Premier expect to pay for all those ridiculous projects that each ministry is pursuing for their handlers?
we will all pay in stealth taxes…but always remember she heard the cry’s from cireba and the big developers!!!!
welcome to wonderland…..zzzzzzz