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Blame PPM for taxation and austerity, says Bush

Premier McKeeva Bush announced the impending introduction of a payroll tax for expatriate workers this past Wednesday.

With the announcement of a payroll tax on expatriate workers as a means of balancing the budget, Premier McKeeva Bush returned to a familiar theme of laying the blame on pressure from the Foreign and Commonwealth Office (FCO) and a compromised economy left behind by the People’s Progressive Movement (PPM), which demitted office in 2009.

On Wednesday, the Premier Mr Bush announced that expats earning more than $20,000 will pay a mandatory payroll tax.

“Government has opted to introduce a Community Enhancement Fee that is linked to the remuneration level received by work permit holders in the Cayman Islands. The fee, which is payable to government, will be charged in respect of remuneration levels that exceed $20,000 per year. The employee on a work permit will make a contribution to the fee, which will be calculated at 10 per cent of the employee’s remuneration,” he said in a statement released to the media.

The Premier also stated that government will seek to introduce another fee to enhance the regulatory environment in respect of the funds industry in the Cayman Islands.

Mr Bush noted that his government was forced either to drastically cut civil service jobs in the range of 500-700, or introduce a new revenue stream.

Mr Bush said that due to the fact that the PPM Administration caused the country to be non-compliant with the financial ratios in the Public Management and Finance Law (PMFL), which resulted in a more than tripling of the national debt of central government, the FCO insisted his government must establish a clear path to compliance without further borrowings.

“The FCO insisted that the Government strengthen its fiscal position by implementing a greater level of expenditure reductions than had hitherto been made by ministers and civil servants. The concern is to make expenditures more sustainable going forward into future fiscal years. The FCO is also of the firm view that the strengthening and improving of fiscal results for the government must not occur solely as a result of reductions to expenditure, but revenues of the government need serious enhancement and expansion,” he stated.

Mr Bush noted that it will be optional for non-Caymanian employees to contribute to pensions.

At present non-Caymanian employees and their employers each contribute five per cent of the employee’s remuneration to pensions.

As for civil servants, any new recruits will have to contribute to both pension and health care costs.

Existing civil servants will be required to pay their health care costs from their salaries. The dependants of civil servants who enjoy the health care coverage from the Cayman Islands National Insurance Company (CINICO) will now be required to pay for the coverage.

“Government is of the firm view that in order for expenditure reductions to be truly sustainable, such reductions should not be restricted to a particular category of expenses: instead, the reductions should be spread across a broad base.

“Accordingly, in addition to the previously mentioned reductions to government’s expenses that impacted personnel costs, the government has reduced operating expenses further. Among the cuts include $1.5 million from public relations, the police helicopter will be disposed off, thus saving $1.7 million and housing allowances that will save the government $1.5 million,” the statement read.

The Premier noted that the FCO also required further cuts to the budget, to the tune of $20 million. This money represents payments to seamen/veteran benefits, social services benefits, including some to the elderly and handicapped persons, temporary rental assistance, temporary payments to unemployed persons, education council scholarships and grants to community programmes.

He stated that he had refused those cuts, as they would bring greater hardship to the community.

The Premier was, however, confident about his government’s budget.

“The achievement of operating expenditure reductions and record low levels of capital expenditure, all result in the government not intending to incur any new long-term debts or loans in the fiscal year. This is a great result –position which very few governments have achieved in recent years, and yet for the present UDP Government, such a feat will be accomplished two consecutive years in a row. We have also achieved an $83 million surplus. which is most difficult in the prevailing economy,” Mr. Bush said in the statement.

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Comments (8)

  • anonymouos

    DEAR UK ECONOMISTS & PREMIER BUSH

    Instead of taxing the hell out of the poor working class,
    WHY ARE YOU NOT TAXING THE DOGONE BANKS THAT ARE THE VULTURE AND CULPRITS OF HIGH IMPOSSIBLE INTEREST RATES.

    This budget is balanced on the backs of the people, not CORPORATE CAYMAN WHO CAN AFFORD TO TAKE A BIG HIT!

    Come on now, your’e trying but you got to do BETTER.

    ITS TIME TO TARGET THE BANKS! Don’t let Truman Bodden talk you out of it, he don;t plan on running next year but he can stop you if you listen to him on this one!

    Reply
  • anonymous

    As I said earlier, there are billions if not trillions of dollars lodged here in the Cayman Islands.
    Why is it that the rich are not being taxed?
    It is senseless for Cayman to be renowned as one of the leading financial centers of the world, even the envy of the US and Mother UK; then have an issue with finances ???? Something is just not setting right with that picture.Government needs to seriously find ways to benefit from the deep pockets of these wealthy investors. Since investors are invited to the Cayman Islands, a tax free jurisdiction allowing them the opportunity to make billions if not trillions of dollars; then the government and its people must make billions as well. Otherwise it makes no sense developing for someone else while the bill is on our backs having to sell government assets.This has got to be the result of the PPM’s reckless spending brought forward from 2009. This was long in the making
    If we are a leader amongst financial global players, then we must act like it, and portray the image as well, living it out in policies and legislation.
    The capital projects to put people back to work is a brilliant start, but more must be done for government to benefit from billionaires doing business in the Cayman Islands else it “Makes no sense.”
    If it looks like a duck, walks like a duck, quacks like a duck, then it is a duck.
    Billions and trillions of dollars in the Cayman islands should mean that the government is smart enough to benefit from some of those billions and trillions, and the people as well and our assets should not be sold, nor should we have a high percentage of poverty and unemployment.

    Putting it simple. The Cayman Islands boasting its position as one of the leaders in the Financial Industry of the world ‘ should not have an “acute” problem with finances!
    The UK is obviously divesting of some of our assets like the police helicopter to bypass any and all responsibilities or potential debts that could be conferred upon them at any point and time or even induce excess borrowing which the UK is clear on with disapproval..
    The premier is working very hard to put the country on its feet but due to the previous government’s reckless spending that forced the UK to take drastic measures against spending and borrowing; then of course this budget set by the UK was inevitable

    !

    Reply
  • My view 2

    Yea….gotta blame someone else. 09 to now we know how much worse off we are. Soooo, FCO & PPM, wonder who next? Us?

    Reply
  • anonymous

    Ah hah! The rubber has Hit the road! The premier did not do this, FCO sent the UK economist here to do this, So Don’t point fingers at Big Mac, he has no authority to impose taxes, BIG MAC HAS BEEN FIGHTING THE UK ” NOT TO IMPOSE TAXES ALL ALONG, I’m sure its the UK’s doing using the UK Economist you can’t chastise him I’m afraid…..So bite the bullet!. We have too many foreigners here so they need to leave so our people can have a chance at getting work in their own country. Work permit fees needs to be abolished and replaced. ITS ABOT TIME. This little islands is way too small for so many foreigners outnumbering Caymanians, something had to be done.

    Meantime think about this…..its OK for Caymanians to be JOBLESS, HOMELESS, ON SOCIAL SERVICES, STAND IN SOUP LINES, LOST THEIR HOUSES AND LIVE ON THE STREETS, TAKING TO CRIME!

    but Expats want to protest because they have to pay a simple Tax that they are accustomed to in their own country?????
    Sorry, but NO ONE IS PAYING ATTENTION TO THIS
    BLUFF!

    Neither the Premier nor the UK nor governor is in a position to concede, keeping the country afloat is more important than pandering to guest workers.

    Wake up. YOu had it made too long its time to wmell the coffee, ‘EXPATS DO NOT RUN THIS COUNTRY!

    CAYMANIANS DO NOT let one of you be caught dead or alive protesting on this issue in so doing you are PROTESTING AGAINST YOURSELF!

    USE COMMON SENSE! Isn’t it time Caymanians get some of the pie! Too many expats in this country, they are now threatening an uprising, open the doors of the aircraft, they need to go back home and pay real taxes, If they threaten violence pick them up and put them on the flights, make room for our Caymanian people to get jobs, enough of this suffering of our people. They now have the idea that they are the best thing since slice bread, ‘SHOW THEM THE DOOR” I’d say they got off really good!

    Kudos Premier Bush and UK Economist

    GOOD JOB!

    Reply
    • big mouth

      What silly points you make firstly expats do not take away jobs from you “superior” caymanians. Don’t you think employers would much prefer to avoid paying permit fee’s by employing locals??? But in many cases locals are lazy, under qualified or don’t apply for many of the jobs which expats are willing to do such as bar work, and the tax free stores in town! If expats were all shipped back home as this small minded person wishes who would wait on your tables or work in your bars? Expats and tourist help your economy in so many ways so you should be grateful people want to come and share your beautiful island. You need not be so ignorant there was poverty in cayman way before expats had been there look into educating your youngsters to get jobs and not get pregnant as soon as they leave school and teach them how to get jobs and not being gangsters then maybe cayman would be a better place today.

      Reply
  • anonymous

    A WORD OF ADICE TO MR. EZZARD MILLER

    Before you make a complete fool of yourself;
    Remember expats on work permits CAN NOT VOTE FOR YOU!!!!???
    Political postering and playing footsie will only hurt you politically and expose you for who you really are.
    How can you Ezzard Miller even suggest that government should TAKE AWAY SOCIAL SERVICES AIDE from Caymanians who have NO JOBS THAT EXPATS ARE FILLING???? They need those services and socially and economically do qualify to receive. Ezzard exactly who do you think you are to act as the authority on DISENFRANCHISING CAYMANIANS JUST TO PANDER UP TO EXPATS?? You are acting like an idiot!!!
    HOW COULD YOU SUGGEST THAT THIS LITTLE TAX EXPATS ARE ASKED TO PAY SHOULD BE REMOVED WHILE THEY CONTINUE TO HOLD JOBS CAYMANIANS SHOULD BE FILLING?
    14% Expat Tax is working very well in Bermuda 10% will work even better in Cayman.
    THE JORDANIAN WAS RIGHT ABOUT YOU EZZARD. YOU DO NOT CARE ABOUT CAYMANIANS BEING EMPLOYED ONLY BLABBERING UP YOUR BIG MOUTH!
    Good thing the OMOV didn’t pass at the polls, between you and those boohooing we would be screwed by both you and them! Its time people pay their way, too much free for all and the infrastructure is weighed down because of overpopulation. We have too many people in this country, some of them need to go home.

    Reply
  • anonymouos

    I would caution the Independent member for N. Side Mr. Ezzard Miller be very carefully to avoid political postering and consider what is really happening to Caymanians. What he is suggesting as a solution in part is

    far from the truth and far from reality.

    CONSIDER WHAT IS REALLY HAPPENING TO CAYMANIANS
    Firstly, I need to know which Chamber of Commerce you Mr. Ezzard and the caller on Rooster this morning is talking about? suggesting the chamber should participate in the solution to this budget issue?.
    It is common knowledge that the Cayman. Islands chamber of commerce “does not promote hiring Caymanians!!” NEITHER DOES THE PRIVATE SECTOR HIRE CAYMANIANS with degrees or not, skilled or unskilled ? Is Mr. Miller suggesting that government make the cuts and then rely on the enemies of Caymanians to provide employment for our civil servants after throwing them out into the streets on their face?

    So which private sector & which Chamber of Commerce in which country are you Mr. Miller and the West Bay caller talking about?

    I am confused; as this is the worst recommendation ever. It will not happen.
    AS WE ARE ALL AWARE THE CHAMBER BUSINESS MEMBERS WILL ONLY SEE TO IT THAT FOREIGNERS FILL ALL JOB POSITIONS WITH FOREIGN CIVIL SERVANTS OR PAPER CAYMANIANS!!!! They will continue to do what they have been doing for years…. It will be deja vu all over again.
    MR. MILLER BE VERY CAREFUL WHAT MESSAGE OR RECOMMENDATIONS YOU MAKE IT COULD ALL BACK FIRE. The premier is protecting Caymanians in making the cuts he has made, whereas you Mr. Ezzard Miller is not really showing us the other side of the coin,and not really looking at the reality that only Government and CUC hires Caymanians not the private sector (only CUC). We can not touch the civil servants its like shaking Israel, a bee hive….!

    So Mr. Miller, where do you think you’re going from here? The lottery idea can work as long as the bookies pay a hefty license fee and a percentage of the winnings paid to government up front before the winner collects his net amount. Otherwise it makes no sense.

    I do not approve of gambling but since they will continue to gamble then government must immediately begin the process to tax them.

    Reply
  • Former Expat

    How racist is this?! Tax the expat for working hard.

    Yes, I’m taking to you. The Caymanian pen-pushers in Government. Get a REAL job in the REAL WORLD & you would not last for 5 minutes!

    Nuff said.

    Reply

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