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(CNS Business): Local financial expert and director of one of Cayman’s largest business conglomerates, Don Seymour, is the latest person to wade in on alternatives to the premier’s direct tax proposals, many of which appear to have been ignored. Seymour has proposed an infrastructure fee based on miles driven that could bring in some $40 million, as well as directorship fees, boat licensing fees, garbage fees attached to water bills and a liquidator fee. However, despite the premier’s calls for solutions, most of Seymour’s ideas appear to have been rejected. Warning that government will not collect on the payroll tax, Seymour is mystified why government has not consulted anyone on such a critical issue.
“This is the most important decision that our country has ever faced yet it’s evident that our community was not consulted on such a drastic change in our economy,” said Seymour, who is the managing director of DMS Offshore Investment Services and the founder of the dms conglomerate, one of Cayman’s most successful homegrown businesses.
“It’s inexplicable that the government would hold a referendum to gauge public sentiment for OMOV [one man, one vote] yet unilaterally decide that it’s acceptable to impose direct taxation. A question that significant should have been on the referendum ballot as the taxation decision was literally announced days after the vote. Imposing direct taxation makes OMOV seem trivial; and even Greece consulted its people,” Seymour told CNS Business this week.
One of a number of people from the private sector who are believed to have offered options to the payroll tax, Seymour said government had to find a rational as well as sustainable approach to balancing its budget.
“It cannot expect to finance its deficits on any one segment of our community,” he said. “Implementing a payroll tax would remove our competitive advantage in attracting talent to the Cayman Islands. It would also dramatically increase the cost of doing business, simply because the employer pays the employee.”
The tax added to work permit fees would make it considerably more expensive to hire in Cayman than any competing jurisdiction, Seymour said, as he warned that collecting and enforcing would be costly and virtually impossible. “The government is trying a hit an extremely fast moving and ingenious target with the payroll tax. There is little chance that payroll tax legislation can keep pace with the speed and agility of tax structuring in the private sector.”
Although there has been virtually no consultation on how government can address its mounting public financial crisis during this budget cycle, Seymour said he had been asked about the directorship fee, but even he did not know whether government had followed through with his recommendations or had come up with another plan because he had not been shown any details.
in addition to his suggestion about the directorship fee, he proposed an infrastructure fee that could raise around $40 million for roads and infrastructure. With 55,000 registered vehicles in Cayman that are licensed and inspected by DVL, all of which have odometers, government could implement a road user fee of 10 cents per mile and collection would require only a simple software change at DVL.
He said the fee could be varied and higher for commercial or luxury vehicles and less for eco-cars and drivers in the eastern districts could get annual credits. “It’s a very flexible structure to accommodate the varied needs of the community,” Seymour added, but government has dismissed it on the basis that it will hurt poor people.
“The fear that the infrastructure fee would impact poor people is not well founded. Poor people don’t own cars,” he said, speaking from knowledge because of the many people he supports in the community. “Having any car in Cayman brings expenses. Government requires the car to be registered and insured. To be registered it needs to be road-worthy so it needs to be maintained properly, which means repair expenses and mechanics are not cheap. Insurance is not cheap. Fuel is not cheap.”
Seymour also suggested a liquidator fee. Insolvency, he said, is a major business in Cayman and a fee of $5 - $10 per insolvency hour would be insignificant when added to a bill but could raise many millions for government. “Every structure that is established eventually dissolves so it is justifiable that CIG earns a fee at the beginning, during and now at the end of the life of the structure, since a proper functioning infrastructure is needed throughout to support the industry,” he said. “These funds could be earmarked for the construction of the new court house that is so badly needed by the judiciary.”
Like most people in the private sector, despite being Caymanian and not impacted by the tax, Seymour warned of the real dangers associated with this type of tax.
He also said the discriminatory nature of the tax was not just between expatriates and Caymanian employees but between government employed expatriates who will not be caught in the payroll tax net and private sector ones who will.
“Even if discrimination between Caymanians and expats is permitted under the Constitution, surely discrimination between public and private sector employees must not,” he added.
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