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(CNS Business): The Cayman Islands Law Society is the latest private sector group to oppose the premier’s idea of a 10% payroll tax on expatriate workers, describing the idea as "flawed". The group, which represents those that sustain the country’s so-called ‘golden goose’ of offshore finance, say the proposal will cause long term damage to Cayman’s entire economy without addressing the fundamental problems of public spending. Government needed to understand that the group it proposed to tax was mobile and a tax on people that can leave was not sustainable, the society said. It also criticized government’s failure to understand the economic principles that had sustained Cayman the last 30 years.
The statement released by the Law Society on Tuesday afternoon follows comments, releases and other public statements from the various commercial sector representatives, including Cayman Finance, the Chamber of Commerce, the Cayman Islands Tourism Association and Sister Islands Tourism Association, all of which have opposed the taxation, as well as a massive outpouring of opposition from the wider community.
The Law Society, which represents predominately commercial lawyers engaged in the financial services sector, was unequivocal in its message about the economic fundamentals that have sustained Cayman and the dangers posed by the payroll tax suggestion in the face of unchecked public spending.
“The measures proposed are counterproductive and do nothing to address undisciplined government spending and a Civil Service that is no longer affordable as presently structured, both of which are likely to undermine any prospect of solving Government’s inability to produce sustainable budgets in future,” the society said.
It pointed out that the local economy is dependent upon foreign source income which sustains both the financial industry and tourism.
“As soon as the tasks to be undertaken can be performed in other places at a more economical price and with less bureaucracy, the investment which comes to Cayman from outside to fund those tasks and the persons who perform them will be removed to other jurisdictions,” the society said. “The tourist industry works on the same principles: as soon as the costs exceed a given sum and the market product is no longer acceptable, tourism will move.”
The lawyer’s group stated that Cayman’s success over the last three decades was down to the recognition of these economic principles by the majority of the population, and in particular those in government.
“Over the last 10 years, however, some of our leaders have lost sight of those principles -- or at least are unwilling to acknowledge them," the society said. “We believe that irrespective of what revenue measures are proposed, unless there is a clear understanding of those principles, economic activity will decline substantially over the medium term -- and with it, revenue. The standard of living of those who remain here will be substantially affected.”
The society said the only long-term answer to the mounting financial difficulties were reasonable, pro-business measures to encourage more financial services to move to the Cayman Islands and to have a tourist product which is attractive to the target market. Acknowledging the pressures to produce a balanced budget, the Law Society offered to meet with government to share and assist in identifying solutions to the difficult and urgent problem of public finances.
See full statement below.
The comments posted do not necessarily reflect the views of CNS or any individual staff member. All comments are posted subject to approval by CNS. Read more
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