Bush outlined plans last week for what he referred to as a “Community Enhancement Fee” to be charged at 10 percent of the remuneration paid to foreign work permit holders in the Cayman Islands in respect of remuneration levels that exceed $20,000 (US$24,000) per year.
“Government had a choice. We could have introduced income tax, property tax, value added tax (VAT), or something softer such as the Community Enhancement Fee,” Bush said at the time.
These proposals come amid ongoing discussion and delay in formulating a budget for the British Overseas Territory that is acceptable to the Foreign and Commonwealth Office (FCO) in London.
However, this move has earned him widespread and stinging criticism.
The Facebook group “Caymanians and expats united against taxation” formed to protest the tax has already attracted over 10,200 members.
The Cayman Islands Real Estate Brokers Association (CIREBA) has not held back in its response to the move:
“The foundation of the lunacy surrounding this approach lies in the fact that this attempt to tax and spend our way out of financial trouble has been tried repeatedly over the course of history and failed miserably each time,” the CIREBA board stated, adding that Cayman should learn from the history of other countries that made a similar mistake,” said statement issued yesterday (August 1) by the CIREBA board.
Andrew Bailey, the head of expatriate tax services at UK accountancy firm BDO LLP, said that the proposed tax would “be a rude welcome for all those who thought they had escaped the clutches of the taxman”. While Forbes Magazine has called the proposed payroll tax on work permit-holders “fiscal suicide”.
In reacting to the situation, leader of fellow overseas territory and offshore rival Premier Paula Cox of Bermuda was swift to draw the difference in policy between the two jurisdictions.
The Premier and Finance Minister issued a statement highlighting Bermuda’s competitive position and the government’s long-term strategic plans for balancing public finances as required by the FCO in respect of the Overseas Territories. The official added that: “The Business Development Unit was designed to provide an innovative body within the Government that focuses on stimulating job creation and GDP growth, improving brand equity and furthering diversification of the economy and industry sustainability, within the international business and tourism sectors of Bermuda’s economy.”