The Cayman Islands is scrapping a plan to impose a direct income tax on thousands of expatriates working in the British Caribbean territory that is famed as a no-tax financial center.
Premier McKeeva Bush issued a terse statement late Monday saying that his proposed tax was “off the table and will not be implemented.” He did not say what alternative revenues might replace it.
The islands’ leader said only that his administration was “satisfied that many of the commitments from the private sector” will meet his demands for a new source of revenue for the government that won’t hit the poorest citizens. He has been huddling with business leaders in recent days.
So the expatriate finance industry wins the day – leaving the government of Cayman in chaos.
I’ve just noted the perception, now widespread, that Jersey’s finances are unsustainable unless local people, who are not that well off, are to be heavily abused by demanding more tax from them. No doubt the expatriate financiers in Cayman will now demand that the same happen there – and I am sure additional sales taxes on the local population will be their proposed solution to the crisis they face. But all they’ll be doing is inciting the sort of backlash against tax haven mentalities that now seems likely worldwide.
The idea that local democracy could actually bring tax havens down is, however, one that I do find rather appealing. There would be a sense of justice in it if it were to happen, and the more local people suffer in places like Cayman and Jersey for the abuse being administered from their shores the moper likely that is to happen.