(CNS Business): Taking the government to task over the new payroll tax for expat workers, the Cayman Islands Tourism Association (CITA) has said that tourism businesses will do their part to help the economy “but without any demonstration of financial discipline from Government, without a core understanding of where Government revenues are derived and little recognition that there is a line that should not be crossed, no sympathy or support will be given to any new taxation proposals.” In an unequivocal statement, CITA also notes the folly of removing the pension requirement and says the move to tax private sector expats only is “grossly unfair and divisive” which “runs counter to the aim and necessity of maintaining a harmonious community in the Cayman Islands.”

In a follow-up to their earlier statement, issued 27 July (two days after the premier’s announcement that he was introducing an income tax on work permit holders) CITA, like the Cayman Islands Law Society, went beyond the bounds of its own industry and criticized government for general financial mis-management.

“CITA is opposed to any direct taxation of any kind until all other means are exhausted. The immediate solution is to reduce Government spending to what the country can afford and control future spending to be in-line with the GDP,” the body representing the tourism sector said Wednesday. “The sustainable answer lies with increasing our air and cruise arrivals, per visitor spend, repeat visitation and increasing our market share within the region.”

The association said it was meeting this week with Premier McKeeva Bush, who is also the tourism minister, to gain more information and to present the position of the tourism private sector.

To be “credibly sustainable” the budget would require both expenditure savings and strategies to increase government revenues, CITA said, suggesting increased flights with new gateways, medical tourism, and re-opening the derelict properties of Hyatt, Divi Tiara on Cayman Brac, and the Courtyard Marriott.

The tourism body said that ambitious goals need to be set in both pillars of the economy – tourism and finance – “and tactics to evolve beyond the status quo will be required”.

“In regard to Government expenditure savings, CITA urges the Government to look at what the country can afford and find a way to decrease these costs as government spending cannot continue to grow at the continued rate,” CITA said. “Tourism businesses will do their part, but without any demonstration of financial discipline from Government, without a core understanding of where Government revenues are derived and little recognition that there is a line that should not be crossed, no sympathy or support will be given to any new taxation proposals.”

Noting its “strong objections” to the new tax, CITA said that targeting only foreign migrant workers in the private sector was “grossly unfair and divisive”. “Divisiveness amongst a cosmopolitan society such as ours runs counter to the aim and necessity of maintaining a harmonious community in the Cayman Islands,” the association said.

Also criticizing the plan for removing the mandated pension contribution by both employee and employer, CITA said that failure to plan ahead for retirement runs counter to the necessity of ensuring that every worker in the Cayman Islands makes provision for their eventual retirement.  Furthermore, those impacted may eventually become permanent residents, and if adequate provision was not made for their retirement, they could become a burden on society as a whole and social services in particular.

CITA said it does not support consumption tax revenue measures such as value added tax or sales tax as this duplicates the current system of import duties.  VAT added onto import duties “would cause significant percentage increases in the cost of living, significantly increase the cost of doing business in the Cayman Islands and ultimately tarnish the destination to visitors as extortionately expensive.”

CITA said it had examined its own industry “to see whether there is scope for additional revenues to be raised from tourism, and concluded that it would be very damaging to the industry if tourism were targeted for yet more taxation.”

The tourism industry is already bearing “a heavy burden” of taxes and fees, such as the 10% Tourist Accommodation Tax that is collected from guests and paid on every tourist rental of every room or condo, hotel and other accommodation license fees, the per-passenger departure fees charged to cruise lines, various fees and taxes charged to airline travelers for which the Cayman Islands is already the most expensive in the Caribbean region, plus many other fees paid to government such as for work permits in what is a very labour-intensive industry.  “Existing tax structures in place are capable of generating the government revenues needed through performance based results,” CITA said.

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