While none supported the imposition of a payroll tax in the Cayman Islands, a debate panel agreed Thursday that some form of fee increases or taxes is inevitable to keep the country afloat in the short term.
The panel, hosted by non-profit group Generation Now, included Opposition Leader Alden McLaughlin, North Side MLA Ezzard Miller, former Deputy Governor Donovan Ebanks, Cayman Finance Chairman Richard Coles and UCCI business professor Bob Weishan.
Representatives from the ruling United Democratic Party government were invited to attend the conference, but said they couldn’t make it.
Four of the five members, including Messrs. McLaughlin and Miller, agreed there should be some increase in government revenue measures. However, they did not agree on the form those charges should take.
Professor Weishan said he couldn’t subscribe new fees or budget cuts for the civil service until someone determined whether government was getting value for money out of all the services it provides now.
“The key question is ‘how does Cayman grow in the future?” Mr. Weishan said. “It seems to me we’re just hoping that we’ll get back to the good old days and maybe the good Lord will take care of us.”
Mr. McLaughlin said he agreed with statements made recently that a 10 per cent payroll tax for work permit holders would have been ‘fiscal suicide’. However, Mr. McLaughlin said some new fees are needed.
“There is no question that now we will have to resort to new revenue measures to be able to meet what the UK is insisting we meet,” he said.
Mr. Ebanks said the additional fees were largely a “by-product” of not having government’s annual budget in place in a timely manner. The current budget year started on 1 July and Cayman was forced to enact a two-month temporary spending plan so the country could keep operating until lawmakers approved a full year budget.
Mr. Miller said the UK’s requirement that Cayman have three months – or 90 days – cash reserves within the budget basically forced new fees to be added.
“I don’t see how we can cut as much expenditure to generate that much cash in this current year,” he said. “But we still have to cut back expenditure to a more reasonable level.”
Mr. Miller said government’s first proposed budget for the 2012/13 year came in at $498 million in expenditures, while the most recent draft sent to the UK totaled $592 million.
The government needed to have “open and frank discussions” about why it required this level of expenditure, he said.
Mr. Coles of Cayman Finance said it was “too late in the day” to make serious expenditure cuts in the 2102/13 budget.
“In the end, that additional revenue is unavoidable,” he said. “We recognise that….and it is our industry that is going to bear the brunt of that [referring to the financial services industry].
“We’ve got to be very careful though, if you squeeze to hard, you might actually kill it.”