Category: Connect Created on Friday, 10 August 2012 07:12
Two days after scrapping plans to impose a controversial “community enhancement fee” on foreign workers, Premier McKeeva Bush has announced increased work permit fees and tourism accommodation taxes.
At a public meeting on Wednesday night, Bush said that the increase in work permit fees would bring in an additional $7.6 million for the government in the current financial year.
The increases will range from a modest 5 percent on work permit fees of between $1,000 and $2,999 to a whopping 35 percent on fees of $15,000 to $24,000 for top level employees.
Among other new revenue measures announced by Bush was an increase in the tourism accommodation tax from the present 10 percent to 13 percent. The departure tax will also go up by $10 per person.
Bush said the increases in the work permit fees would affect real estate sales agents, financial controllers, accountants, managing directors and chief executive officers.
“Those are the group that will bear the burden of the work permit fees,” he said.
“In aggregate, the proposed alternative revenue measures proposed by the private sector group are expected to generate $44.3 million in 10 months and $53 million in the full year,” the premier said.
There has been ongoing discussion and delay in formulating a budget for the Cayman Islands, a British territory, that is acceptable to the Foreign and Commonwealth Office (FCO) in London and the local government was forced to implement a two-month temporary spending plan in July to keep the public sector operating until a full budget for the financial year 2012/2013 could be approved.
The government presented to the FCO for its prior approval in June 2012, its intended 12-month Budget for the 2012-13 fiscal year before taking the Budget to the Legislative Assembly and Finance Committee. The FCO refused that budget request.
The FCO insisted that the territory’s government strengthen its fiscal position by implementing a greater level of expenditure reductions than had hitherto been made by ministers and senior civil servants.
“The concern is to make expenditures more sustainable going forward into future fiscal years. The FCO is also of the firm view that the strengthening and improving of fiscal results for the government must not occur solely as a result of reductions to expenditure, but revenues of the government need serious enhancement and expansion,” Bush explained at the time.
Bush said the FCO wants the Cayman Islands to have a projected operating surplus of $76 million. With the new revenue measures, along with cost cutting and other revenue proposals previously announced, the government has a projected operating surplus of $70 million.
“I am hoping to get a favourable reply from the Foreign Office by Tuesday of the coming week and deliver the budget to the House by 20 August. That only gives us 11 days to get it done,” Bush said.
Administration officials said last week that the territory only has spending authority through 31 August and that another temporary budget might be necessary.
Although the proposed direct tax on foreign workers’ salaries has been abandoned and replaced with the new measures, other measures such as civil servants paying towards their pensions and health insurance coverage remain part of the government’s revenue budget.
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