By Gordon Barlow

Cayman has a relatively high international profile; that’s no secret. Among Offshore tax-havens we are in the top ten most-recognised, and in some categories in the top five. Financial moguls keep our name alive everywhere – in newspapers, novels and movies, in comic strips and late-night talk-shows. Cruise-ship tourists wear T-shirts that read “I have a secret bank account in the Cayman Islands.”

Most of the world’s politicians have secret accounts in one offshore haven or another, and we get our fair share. We also get slandered as the bad guys. But… we don’t elect foreign politicians, or license foreign lawyers; and all our “offshore” banks have foreign parent companies. Barclays, Morgan Stanley, Deutsche Bank, Santander, Bank of Tokyo, Bank of China… not many of them are owned by Caymanian fishermen or taxi-drivers – or our own bankers or accountants, come to that.

Outside the world of offshore business, our tax-regime is not all that well known, except to the politicians in high-tax countries. Journalists on overseas newspapers don’t have much of a clue at all. They think they do, but they don’t; all they do is mislead their readers. From time to time I post very short (100-300 words) articles about Cayman on international web-forums. The articles on the topic of our tax-haven receive as many hits in a week as any of my other posts receive in six weeks. (Other posts are on topics such as Working in Cayman, Retiring in Cayman, and Doing Business in Cayman.) The numbers aren’t high, since the readers are general – not professionals at all – and Cayman isn’t nearly as popular a subject as other places. But our absence of Income Tax never fails to spark the interest of casual visitors to the sites.

We forget how lucky we are, much of the time. We also forget to honour the people and companies who set up the tax-haven back in the late 1960s: British and Canadian banks with a presence Nassau, Bahamas, drafted the relevant Laws and procedures alongside (yes, this is true!) the British Government and its Foreign & Commonwealth Office (FCO). Nassau was headed for the rocks as an offshore haven, because of its shaky domestic politics, and the foreign banks were anxious to replace it with somewhere fresh. For their own selfish reasons, of course, but hey – selfish reasons are what drive most economic development.

Once established, the new tax-haven flourished, and has been kept alive for the past fifty-odd years by the combined efforts of expat professionals, FCO clerks, and local politicians – all acting selfishly while benefitting every resident of Cayman. Collecting fees from foreign clients is a darn sight easier for our community than selling turtles and thatching ropes!

The runaway success of our tax-haven has brought so much money into government’s coffers that a tax on wages has never been genuinely needed. Yes, our local rulers (politicians and government bureaucrats) have spent Public Revenue like drunken sailors, and have borrowed recklessly to fund their extravagances. They would very much like to tax wages, and indeed the FCO has often urged that they do so; but they are well aware of what happened the last and only time that was tried, in 1987.

That attempt, by our Cabinet-equivalent, was routed by a ferocious outcry from voters mobilised by our Chamber of Commerce, of all people. We should honour them, too, whose efforts have kept any kind of tax on individual wages and business profits at bay ever since. The memory of that bitter 1987 fight lingers still, among our political and bureaucratic establishment. Income Tax is a line in the sand that it dare not cross.

At least, so you would think. Yet out of nowhere, just very recently, there has been talk about government needing more revenue, and any time that kind of talk hits the marl road we can be sure that Income Tax is on the cards. After all, our rulers will have to replace all that lost cruise-ship revenue from somewhere – right? And, another bureaucratic empire is always a nice way to get re-elected – right?

So. It’s time to beware. The hawks are circling.

END

Gordon Barlow

Gordon Barlow has lived in Cayman since 1978. He was the first full-time Manager of the Cayman Islands Chamber of Commerce (1986-1988)- a turbulent period as the Chamber struggled to establish its political independence. He has publicly commented on social and political issues since 1990, and in 1998 served as the secretary of two committees of the ‘Vision 2008’ exercise. He has represented the Chamber at several overseas conferences, and the Cayman Islands Human Rights Committee at an international symposium in Gibraltar in 2004.

You can view all his blogs at: https://barlowscayman.blogspot.com