It’s now official. And if you are an expat and earning above $36,000, you will be privy to losing 10% of your income. What is worse for you is that this tax will likely include bonuses and other compensation as Government Minister, Rolston Anglin – Minister for Education, Training and Employment, said the 10% will apply “to a wide definition” of salaries.

Premier, Hon. McKeeva Bush, revealed details of the controversial community enhancement fee (read TAX) at his reconvened public meeting at the Sir John A. Cumber School hall last night (1).

As is his want, and knowing he is in his own turf so it would be well received, he “had a go” at the Governor telling him to “stay on the beach and sun his buns”! Totally disrespectful, shocking but he thinks it’s clever. He again maintained that he could not cut down the civil service numbers because it was the Governor who hires and fires and to blame him if we have too many civil servants. It was his department and there was nothing he (Bush) could do about it.

“The Governor can’t say he’s not responsible. He is responsible not the premier,” Bush retorted, “None of the Cabinet members can hire and fire or sign any contracts for civil servants. That is the Governor’s responsibility under the constitution and he himself can explain why the civil service numbers are so high.”

He said he didn’t want to have to implement the “fee” but he had no choice. It was being brought in as a “last resort”.

Summary of details:

1. All expat workers on work permits will be taxed 10% earning more than $36,000 per year. Note: This is different from his earlier announcement that it would be applied on expat workers earning above $20,000.
2. The 10% will also be applied to a wider definition of salaries that could include bonuses and other compensation.
3. The tax will not apply to non-Caymanian permanent residents or to non-Caymanian government employees.
4. No discount will be given on the tax. This means there will be no $35,000 subtraction before tax levied. Someone earning $35,000 will not have 10% tax deducted. Someone earning above that (eg. $36,000, $40,000, etc.) will have the full 10% deducted from their salary.
5. Planned introduction of a further tax of 5%, based on salaries, to be deducted on employers of expatriate staff in “certain categories of employment”. –further details ‘soon come.’
6. The collection of the tax will be executed by the Immigration Department.
7. The community enhancement fee will never be extended to Caymanians.

These tax measures were brought in, Mr. Bush explained, as an incentive to hire more Caymanian staff.

Although Mr. Bush is confident the Immigration Department will be able to deal with the collection of the tax, because “they already have a database of work permit holders and details of salaries” he must surely know it will be not as easy as that.

Yes, Immigration knows who the work permit holders are, but how is the “policing” of the salaries they are getting to be carried out? This must mean additional staff and increased cost but then it is not the government’s department, is it?  Despite this, he is informed enough to know that “with the help of new technology, it will not require any major investment to bring in the new source of revenue.”  He failed to provide any figures, though, to substantiate this claim.

The hall was packed but there were no demonstrations. There were Caymanians and even some expats present who were in agreement with the implementation of the community enhancement fee!

I would love to know the name of the person who came up with that title.

Of course, the media came into a bashing, as it is our fault for calling the tax on foreign workers’ earnings an “expat tax”. It is a community enhancement fee but he obviously still doesn’t know the difference between a “fee” and a “tax” even though we gave both definitions in yesterday’s (2) edition of iNews Cayman. But, we are “no friend of Cayman”.

The majority of his two hour speech was given to a verbal and rude tirade at the Governor, a past governor, the Auditor General – who was the Governor’s “hit-man” and the Foreign and Commonwealth Office (FCO).

He said he had tried to find other solutions to the budget problem but when his government had put them forward, they had been opposed by people causing “fire storms” or shot down in flames.

When eventually questions could be asked from the floor, he was asked about what research, analysis and assessments had been done by economic experts concerning all the potential problems including the long term harm, how the tax would be collected, and for tax evasion and avoidance?

“We believe it’s going to work,” was his only reply.

Mr. Bush confirmed the budget had been sent to London for approval and hoped he would get this by Friday (3). The budget he had sent included the community enhancement fee and a number of other fee increases impacting the offshore sector. His Budget would be presented to the Legislative Assembly on Thursday Aug. 9^th. Although the economist sent to the Cayman Islands by the FCO had insisted on a $76 million surplus, he had not been able to provide that. The surplus he had included was $70 million.

I nearly forgot.  The previous government, the PPM, also got hammered.  It seemed so long ago they were in power.