Cayman Islands Government Quashes Income Tax Rumours

by Amanda Banks, Tax-News.com, London

06 August 2001

The government of the Cayman Islands has categorically refuted reports that there are plans afoot to introduce income tax. In a statement released by the government, Financial Secretary Hon. George McCarthy confirmed that he has no such intention: 'Any speculation in this regard is ill-informed and contrary to the long-established position of these Islands,' he said.

The rumours over income tax appear to have stemmed from a discussion paper which was prepared by the Economic Research and Development Unit. The subject of income tax appears only once within the 93-page paper, which has no official status other than having been cleared by Executive Council for circulation to Members of the Legislative Assembly.

The author of the report, the Director of the Economic Research and Development Unit, Dr Elizabeth Parsan, addressed a number of misleading statements that have recently appeared in the local press and subsequently fuelled the speculation: 'There are a number of inaccuracies in the Cayman Net News article of 27 July, 2001 entitled, 'Income Tax Discussed' which require clarification. Within the 93-page document, income tax was mentioned in only one sentence and never further discussed. The dramatic headline hardly does justice to the document it is alleged to be based upon.'

The discussion paper was prepared by professionals within the public service as a technical document as opposed to a political document. Most importantly, states the government, the presumption that the recommended policy changes include the introduction of income tax is completely unsubstantiated.

Mr McCarthy concluded: 'It is unfortunate that the contents of this document have been distorted. Cayman has spent the past two and a half years vigorously and successfully defending its right to decide its own tax structure, which is and remains resoundingly consumption-based, not income-based.'

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