From Radio Broadcast Friday 27^th July

Good evening Caymanians and expats, these are troubling and unstable times in our beloved Cayman Islands. The Premiers announcement on Wednesday July 25 that his UDP government intends to introduce direct income based taxation will kill the goose that has been laying the golden eggs for Cayman.

This announcement has the potential to seriously disturb the tranquil and prosperous life style we have enjoyed in these Cayman Islands for many years and it is all so unnecessary.

When the Premier cut civil servants salaries for the last financial year I did not support it as I deemed it unnecessary and short sighted. I was proven right because it was restored during the same financial year, playing politics with Caymanians income.

Mr. Premier it is clear from your failures as Minister of Finance that you are not capable of handling the duties and responsibilities of this Ministry. Please, Mr. Premier, it is within your authority of Cayman Islands Constitution Order 2009 to re-assign the Ministry of Finance to another Cabinet member. Assign the ministry of Finance to Roulston, he at the very least, has the knowledge base to understand and speak the LINGO of finance with the FCO and Hon. Bellingham.

Mr. Premier, the idea of income based taxation which you call Community Enhancement Fee, strange choice of words, almost laughable but very painful to the local economy. Caymanians are not stupid Mr. Premier we all understand that today this tax will apply to work permit holders because they can’t vote in the May 2013 elections but once the election is over the next budget will include all Caymanians.

However it was encouraging to read the Governor’s succinct press statement last evening and there maybe hope that because this new income based tax is so unfair, discriminatory and unlikely to generate much revenue beyond the cost of collecting it that the FCO economist will reject it.

Mr. Premier I repeat the problem with the national budget is not the sustainability of the revenue base but the un-sustainability of the patterns of expenditure. How can you possibly rationalise the selling of the police helicopter, without consultation with law enforcement, to save $I.5 million while retaining your $4 million nation Building Fund to influence votes.  I believe most Caymanians would prefer to use one third of your Nation Building Fund to fight CRIME rather than give it to churches to build edifices unto themselves at great cost to our local social environment.

Mr. Premier you always complain that we don’t offer any solutions will here is one to replace this ill-conceived expat tax. The banks introduced a 4 cents spread on US dollar transactions in 1968 when the Government introduced Cayman currency, and they have made million of dollars from these transactions. I recommend that the Government reduce this 4 cents to 2 cents and collect it from the banks into governments revenue. This will have no negative effects on the local economy or  personal income streams, if anything it could have a small positive effect by reducing the cost of living by 2%. The Government will collect much more revenue from this than from your Community enhancement fee with no additional cost or further increase in the civil service numbers.

Here is another untapped source of revenue legalise the number/lottery underground economy and charge a  25% of income license fee. Mr. Bush don’t be concerned with your church vote many of then buy the illegal numbers and would prefer to strengthen their Christian performance by not breaking the law.  I also believe that this will generate much more income than your Community Enhancement fee and not require additional civil servants to administer.

Mr. Premier it is unwise to link more income streams to foreign workers who are transient economic opportunist because the growing population of trained and educated Caymanians will dictate a reversal of your governments policy of increasing the number of foreign workers because the government needs the income. Educated Caymanians will demand opportunities for entry into the workforce and those already in the workforce will demand promotions and greater career building opportunities both of which will see a reduction in work permit holders and the income from work permits. So bad long term planning totally unsustainable and a dangerous social gamble.

Now Mr. Premier you blame the Governor for the increase in the cost of the civil service and claim you have no authority to reduce it. Wrong Mr. Premier you have all the authority to do something, just not the political will to accept responsibility and do the right thing afraid of the votes your government might loose.

Mr. Premier the civil service exists and grows to implement your law, policies and programs.

So here is a suggestion that I first offered to your government in April 2010, amend the Public Finance and Management Law to re-centralise government’s finances, the country might even get proper accounts as an additional benefit. This can eliminate fifteen or sixteen financial centres in the Government providing a substantial reduction in cost as well as bodies. However you rejected my suggestion by private members motion claiming your government was already doing so and would amend the PMFL in June 2010. It did not happen because you did not have the political will to do so. Instead you spend additional scarce resources of the government to bring in a consultant from the FCO and still has not acted on his report to make necessary and appropriate changes to the law. Incompetence, incompetence extraordinaire.

The civil service management law also needs to be amended to reduce the number of Human resource centers in Government by re-centralizing this function to reduce cost and numbers in the civil service. Again you do not appear to have the political will to do so.

Now Mr. Premier don’t continue to dismiss these cost reduction suggestions on the weak allegation that Caymanians will loose jobs there are adequate jobs in the private sector occupied by work permit holders that these Caymanians can get if you are willing to cancel the work permits. Short term reducing in work permit income for long term gain by reduction of the civil service with improved administration accounting and management of the service.

Mr. Premier this community enhancement fee is simple a bad idea worst that your proposal to create nine electoral districts by combining North Side, East End and Bodden Town, do not implement it. Lets work together to find more sustainable ways to enhance the current revenue base and control expenditure.

Now Mr. Premier lets address the 8000 pound Gorilla in the room, over your political career you have nurtured and developed a dependency on government mentality among your supporters and the wider electorate in order to maintaining and increase your personal political fortunes. The country can no longer afford this dependency, 8000 people on the dole from government costing some 60 million. It is no wonder the FCO wants to cut 20 million from this budget.

No government can afford to maintain 15 – 20% of its productive population on the dole.

The country knows of the persons turning up to pay rent with a social services voucher driving a new Mercedes Benz and the couple both working but receiving social service benefits, and the wide spread belief by the general public that non-Caymanians are receiving benefits from social service.

Yes, there are some Caymanians particularly the elderly who need and indeed must have help from government during their non-productive years to enhance quality of life during their old age.

However as a matter of priority your government must do a proper assessment of these 8000 persons and eliminate those who are not deserving and yes even in an election year, because it is the right thing to do.

Importing labour to keep Caymanians out of jobs to enhance government revenue through work permit fees while spending substantially more than is collected to maintain 8000 persons on the dole is not good long term planning.

This government dependency mentality that you and your government fosters must be reversed and such effort spent making these persons productive members of society with high self esteem, pride and self value is far better long term planning even if you loose a few votes in the process. This will improve your political legacy.

Furthermore since the For Dart Alliance has not been finalised you need to re-negotiate and claw back most of the concessions so that Cayman and Caymanians get more from this mega deal by improving Government existing revenue rather that the substantial erosion, reduction and giveaway of  governments revenue.

Now Mr. Premier why your government’s obsession with destroying, eroding and reducing Caymanians pensions, the lack of which has largely led to the dependency on government of those past their working age. First you approved a withdrawal of up to thirty-five thousand by persons from their existing pensions savings, seriously reducing their pension when most needed. Now you are proposing that  greater than 50% of those who contribute to voluntarily withdraw from the pension plan seriously reducing the earning capacity of the funds  and therefore the pensions Caymanians will receive in the future. This will have the disastrous effect on Government’s expenses by increasing the cost of social services.

Now Mr. Premier reality check time to be a statesman, not play politics, govern for the next generation not the election in May 2013 consider  the following;

1. Cancel the Nation Building fund. It is not building it is destroying

2. Reassess the 8000 persons on the dole

3. Amend the Public Management Finance Law

4. Amend the public service management law

5  Legalise the numbers lottery

6. Take the two cents spread on US CI transactions.

7. Drop the income based work permit community enhancement fee.

8. Leave the pension plans alone.

9.  Claw back the concessions from Dart

10. Claw back the concessions from Shetty group.

Oh and while you are in the mood to drop your ill-conceived tax policies please remember to drop this idea of combining North Side, East End and Bodden Town into one voting district — will not happen.

Mr. Premier you are the premier of the Cayman Islands which has within its borders some of the world’s best planners and promoters of ways to avoid and reduce taxation. These are the very persons you propose to tax – really.

I promise you they are right now as I speak, designing and implementing ways to reduce and avoid this tax. There will not be enough taxes collected from this to cover the cost of implementing and enforcing it.

The international press Forbes magazine, no less, are poking fun at us one day after you make such a reckless announcement, “ you know things are bad when the Cayman islands call for income tax”, enough said.

Most economists will tell you, on both hands, that increasing taxes does not always increase revenue.

Mr. Premier, please return to the drawing board on the budget Community enhancement fee bad idea – source of problem not revenue but unjustified expenditure.

Have a prayerful weekend Cayman.  These are troubling times and our leader has fallen off the deep end and needs to be rescued.