Poverty in the Cayman Islands

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There was a stunning editorial on Cayman NetNews yesterday. It was entitled 'The gap between rich and poor'. I would love to quote it in full. It's a telling story of just what life in a tax haven is really like.

The background is simple. The Cayman government is undertaking a National Assessment of Living Conditions (NALC) survey amongst its population of 45,000. In plain language, it is essentially about examining how poor people in our community are living.

As Cayman NetNews puts it:

Even if we count them and work out what percentage of the population the wealthy represent, it is the people on low-income scale who this study should be examining closely.

The circumstances in which they live, the food they eat, the way they care for their children in low income homes and how the unemployed and low earners manage in a society where the 'haves' tend to push up the cost of living, putting the 'have nots' in continually worse situation are concepts that need to be understood.

That's not the sort of issue or comment most people would associate with Cayman, which seeks to encourage the idea of being a wealthy idyll. Nor is this:

The imbalance and the widening gap between rich and poor are problems for many countries around the world. However, different tax systems allow some governments to manipulate the system so that low earners have some leeway.

For example, income taxes are put on a graduated scale depending on earnings. Higher incomes, means citizens pay a higher percentage of tax and vice versa. Because this country does not have income tax, Government charges fees and duties, which is a nice word for 'tax', which are pretty much the same no matter how much is earned.

In other words, the security guard who earns $3.33 per hour pays the same duty when shopping at Fosters as the lawyer earning $120,000 a year. Since the percentage of salary paid in duty by the security guard is disproportionate to the lawyer, some may see this system as inherently unfair.

It will be interesting to see when the study is completed, what proposals the Government will come up with to help the needy out of poverty.

Put simply - some in Cayman realise the problems that regressive taxes cause. They have them. And they are exacerbating the poverty suffered by the poorest members of their society. This is the poverty that gives rise to these issues:

Many people are already thinking that many of the social problems that will be revealed will include alcohol, drug abuse, child abuse and sexual molestation. It is unlikely that many people will be surprised at the likelihood of the survey revealing that a significant percentage of the population is living in poverty.

Another interesting factor about the extent of poverty in this country is that much of it is a result that many people here are affluent.

The demands on the economy made by those earning big salaries in the offshore sector for example, are driving up housing costs to such an extent that many people in low-income jobs cannot find affordable homes to rent. In many cases the idea of buying a property is way beyond their expectations.

This growing gap between the rich and poor will inevitably lead to more complex social unrest. We may think we have problems now with alcohol and drug abuse - but if the growing divide between 'the haves' and 'have nots' is not addressed those problems will escalate.

Some of that could have been written just as easily of London. The issues are the same. So are these issues:

Moreover, this socio-economic imbalance will also lead to complex societal issues that are tied to immigration.

If it is not addressed, the divide may see more native Caymanians leave the country to settle in places, which have lower living costs, where they can buy or rent homes at a reasonable cost while earning blue collar wages.

This means the service roles here will be increasingly filled by expatriate workers from much poorer jurisdictions who are more prepared to live in inadequate housing as they accumulate earnings, which may be deemed particularly low to locals, but more then enough to make a difference in some of third world or developing nations from which they come.

We have all heard stories of illegal housing for the underprivileged residents of Watler's Road at the bottom of Eastern Avenue and other areas around the country. The 'haves' and 'have nots' divide could lead to more of these hovels.

The editorial concludes:

Whatever the result of the NALC study, Government will need to spend money addressing the growing poverty problem here. However, the question will be how much will be needed and how much the administration is willing to spend.

To put it another way, are the richest in Cayman willing to watch the social infrastructure of the place which most of them will have moved to collapse as they count their money? It's a question that's almost universal, but I greatly admire the author of this piece for having the courage to write it in a place like Cayman. That can't be easy. It shows the extraordinary cost the offshore world imposes in tax havens, and in the rest of the world as well.

I've probably overquoted the report. I hope I will be forgiven by Cayman NetNews. The fact is that I think this is an issue many of us might return to time and again.