Cayman Islands Implements Temporary Economic Stimulus

by Robert Lee, Tax-News.com, London

25 October 2001

In an attempt to 'invigorate' commerce on the Cayman Islands, the Cayman Net News online news service has reported that the government is seeking to provide the private sector with financial incentives as well as restricting public spending.

Plans include a six-month package of concessions on stamp duty on land transfers, building permits and infrastructure fees. The measures were in the planning stages at the time of the September 11 terrorist attacks in America but the knock-on financial effects of the attacks have made it all the more important to implement the initiatives. The Governor, Peter Smith, explained: 'I commissioned this review some six months ago so it is not therefore some knee-jerk reaction to our current budget problems but is the result of an increasing awareness that a deeper appraisal of the public service was required.'

Entitled 'The Immediate Economic Stimulus Package,' the measures involved apply for the next six months only and include a reduction of the 9 per cent and 7.5 per cent stamp duty to 6 per cent on land transfers with already constructed properties and to 5 per cent for other transfers. Building permit charges and infrastructure fees will be slashed by 50 per cent in all categories.

'In selecting these proposals, the government was careful to ensure that it arrived at the most beneficial (or least harmful to government revenue) fee reductions or actions,' said Mr Kurt Tibbets, the leader of government business.

Mr Tibbets added that the fee reductions will be reflected down the line to the consumer. 'For example,' he said, 'if government reduced stamp duty on land transfers from 7.5 per cent to 5 per cent, then the real estate sector would be expected to reduce its commissions on sales by 33 per cent as well.'

Financial Secretary, Mr George McCarthy, said he expects public spending limits will save the government $12 to $15 million in 2002 which would reflect a 5 per cent saving over the 2001 budget. In addition, moratoriums on civil service expenses and filling vacant posts would see an extra $5 million in government coffers.

Mr McCarthy commented: 'The government recognises that it needs to urgently reverse the growth in public expenditure and realise savings wherever possible. At the same time, maintaining high morale in the civil service is a high priority.'

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