Posted on 10/17/2009 10:03:40 AM PDT by SeekAndFind
GEORGE TOWN, Cayman Islands — What happens to a tax haven when it has to raise taxes? The Cayman Islands may soon find out.
Caught in a vise of shrinking revenue and stubbornly high public spending, the Caymans averted a fiscal crisis this week by securing a $60 million overseas loan.
But the Foreign and Commonwealth office in Britain, which oversees the Caymans and can veto foreign lending requests, has delivered an ultimatum: The rest of the $284 million the Cayman government says it needs will not be forthcoming until this offshore financial center imposes spending cuts and considers some form of direct taxation on businesses here and its 57,000 residents.
For a tropical paradise that has never taxed income, property, corporate earnings, retail sales or capital gains, such a suggestion borders on heresy.
The Caymans have built their prosperity less on tourism, like most other Caribbean islands, and more on serving as a tax-free home for 9,253 hedge funds and many more banks and companies that pay small fees to establish the Caymans as their official domicile while operating mostly elsewhere around the world.
With the explosion of global finance, the Cayman model flourished, and fees from financial institutions, together with tourism, made up as much as half of government revenue. Duties on imported goods accounted for the other half.
In June, the full effect of the financial crisis touched shore with the effect of a hurricane. A drop in financial and tourism revenue transformed a projected surplus into a deficit of about $100 million — a huge gap for an annual budget of some $800 million — and the leader of the Cayman government, W. McKeeva Bush, warned of a fiscal crisis.
(Excerpt) Read more at nytimes.com ...
Lol So its Bush’s fault...W MeKeeva Bush that is.
Where will Gerald Parsky go or will he stay?
Miss ya, kid. ;-)
Mckeeva Bush is an idiot. Just like America, the Caymanians vote in the same old useless feckless idiots.
A hundred million out of eight hundred million?? C’mon, that’s only 12.5% of the budget! The US government borrowed 43 cents for every dollar it spent last year!
They need to cut spending
How about a “help us keep your offshore account information hidden” ‘fee’ to raise the money? I’ll bet that will work.
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