It seems that the realisation that new taxes are urgently required in order to cover the projected government budget shortfall has finally dawned on many people and something we have been writing about for years – the need for new and creative revenue measures – is now being taken seriously.

We have suggested several such new revenue measures on many occasions and it is therefore interesting to see most if not all of them now being openly discussed at the recent finance “summit” called by Leader of Government Business, Hon. McKeeva Bush, to try to find a way forward out of the current economic mire the country finds itself in.

One suggestion in particular we have advanced on a number of occasions has been a proposal for a government levy on the transfer of funds to and from local financial institutions.

In the past, this has either fallen on deaf ears or provoked opposition from the financial services industry on the grounds that it would drive away business. Now, however, such a tax on money transfers is part of an eight-point programme for increasing government revenues advanced by the Civil Service Association at the finance summit.

Some countries have already been alert to this means of raising revenue and have been contemplating the imposition of a charge based on a percentage of the transfer fee charged by the financial institution concerned. Anywhere between 10 and 50 percent has been mooted in this respect.

Thus, if a bank charges $40 for a wire transfer to an overseas account, the government would receive an additional $4 to $20. Similarly, if the money transfer companies operating here, such as Western Union, Quik Cash, Money Express, Moneygram, National Business Society of Cayman, NCB Remittance, Money Transfer, and others, including the retail banks, charge $20 to make a transfer of funds, the government would receive $2 to $10 each time.

With Jamaican nationals sending back home at least $150 million and Filipinos and other nationalities adding to that figure at least another $100 million, if each transaction averages, say, $500 it means that the money transfer companies alone are raking in a minimum of some $10 million annually. And guess what, if this fee was made mandatory by the government, they will add that to their normal transfer fee anyway.

If such a levy was to be at the lower end of the scale, it could well be that the financial institutions would absorb such charges so that customers would not be affected at all.

We do not know the relevant volume of money transfers being made each year by banks and other financial institutions in the Cayman Islands but it must be substantial, and surely the Monetary Authority and/or the Statistics Unit would have such figures readily available so that a determination could easily be made as to what could be raised at various rates of such a levy.

Even if the government could raise ten percent of what is required to cover the budget deficit, at least it is a start in that direction. Indeed, there will be no “magic bullet” that will solve the country’s economic problems at a stoke so it will in any event doubtless be a process for the government of introducing a larger number of smaller measures that will together raise the necessary revenue.

Interestingly, the Guardian newspaper in Britain published an analysis of what it reported as Lord Turner’s championing of a levy on financial dealings marking a breakthrough in the long struggle to have the neglected brainchild of American economist James Tobin become a practical policy proposition.

Much of what was said in the article mirrors this newspaper’s own experience in trying to promote debate on the money transfer tax mentioned.

The so-called Tobin tax was, when originally proposed, limited to foreign currency transactions, which would allow national governments to stop their economies being at the mercy of speculators.

The reactions to our suggestion for a money transfer tax echoed the responses to Tobin’s proposal: it “sunk like a rock”; it was ignored; it would “throw sand in the wheels of global finance”; and it would it would drive away financial business.

Now, all these criticisms have apparently disappeared in the face of the overriding exigencies of the current budget crisis, thus proving the truth of the aphorism that the prospect of one’s imminent demise concentrates the mind wonderfully well.