By Gordon Barlow

Cayman has a
relatively high international profile; that’s no secret. Among
Offshore tax-havens we are in the top ten most-recognised, and in
some categories in the top five. Financial moguls keep our name alive
everywhere – in newspapers, novels and movies, in comic strips and
late-night talk-shows. Cruise-ship tourists wear T-shirts that read
“I have a secret bank account in the Cayman Islands.”

Most of the world’s
politicians have secret accounts in one offshore haven or another,
and we get our fair share. We also get slandered as the bad guys.
But… we don’t elect foreign politicians, or license
foreign lawyers; and all our “offshore” banks have foreign parent
companies. Barclays, Morgan Stanley, Deutsche Bank, Santander, Bank
of Tokyo, Bank of China... not many of them are owned by Caymanian
fishermen or taxi-drivers – or our own bankers or accountants, come
to that.

Outside the world of
offshore business, our tax-regime is not all that well known, except
to the politicians in high-tax countries. Journalists on overseas
newspapers don’t have much of a clue at all. They think they
do, but they don’t; all they do is mislead their readers. From time
to time I post very short (100-300 words) articles about Cayman on
international web-forums. The articles on the topic of our tax-haven
receive as many hits in a week as any of my other posts receive in
six weeks. (Other posts are on topics such as Working in Cayman,
Retiring in Cayman, and Doing Business in Cayman.) The numbers aren’t
high, since the readers are general – not professionals at all –
and Cayman isn’t nearly as popular a subject as other places. But
our absence of Income Tax never fails to spark the interest of casual
visitors to the sites.

We forget how lucky
we are, much of the time. We also forget to honour the people and
companies who set up the tax-haven back in the late 1960s: British
and Canadian banks with a presence Nassau, Bahamas, drafted the
relevant Laws and procedures alongside (yes, this is true!) the
British Government and its Foreign & Commonwealth Office (FCO).
Nassau was headed for the rocks as an offshore haven, because of its
shaky domestic politics, and the foreign banks were anxious to
replace it with somewhere fresh. For their own selfish reasons, of
course, but hey – selfish reasons are what drive most economic
development.

Once established,
the new tax-haven flourished, and has been kept alive for the past
fifty-odd years by the combined efforts of expat professionals, FCO
clerks, and local politicians – all acting selfishly while
benefitting every resident of Cayman. Collecting fees from foreign
clients is a darn sight easier for our community than selling turtles
and thatching ropes!

The runaway success
of our tax-haven has brought so much money into government’s
coffers that a tax on wages has never been genuinely needed. Yes, our
local rulers (politicians and government bureaucrats) have spent
Public Revenue like drunken sailors, and have borrowed recklessly to
fund their extravagances. They would very much like to tax
wages, and indeed the FCO has often urged that they do so; but they
are well aware of what happened the last and only time that was
tried, in 1987.

That attempt, by our
Cabinet-equivalent, was routed by a ferocious outcry from voters
mobilised by our Chamber of Commerce, of all people. We should honour
them, too, whose efforts have kept any kind of tax on individual
wages and business profits at bay ever since. The memory of that
bitter 1987 fight lingers still, among our political and bureaucratic
establishment. Income Tax is a line in the sand that it dare not
cross.

At least, so you
would think. Yet out of nowhere, just very recently, there has been
talk about government needing more revenue, and any time that kind of
talk hits the marl road we can be sure that Income Tax is on the
cards. After all, our rulers will have to replace all that lost
cruise-ship revenue from somewhere – right? And, another
bureaucratic empire is always a nice way to get re-elected – right?

So. It’s time to beware. The hawks are circling.

END

Gordon Barlow

Gordon Barlow has lived in Cayman since 1978. He was the first full-time Manager of the Cayman Islands Chamber of Commerce (1986-1988)- a turbulent period as the Chamber struggled to establish its political independence. He has publicly commented on social and political issues since 1990, and in 1998 served as the secretary of two committees of the ‘Vision 2008’ exercise. He has represented the Chamber at several overseas conferences, and the Cayman Islands Human Rights Committee at an international symposium in Gibraltar in 2004.

You can view all his blogs at: https://barlowscayman.blogspot.com