The widespread media coverage of the economic difficulties currently being experienced by the Cayman Islands, and the corresponding speculation that we are heading for bankruptcy, has led other small island states, notably Bermuda and Jersey in the Channel Islands, to counter any suggestion that they are experiencing similar difficulties.

Inevitably, this leads to comparisons that do not speak favourably as to the financial competence and prudence of successive governments in the Cayman Islands.

Jersey in particular has built up significant financial strength and resilience compared to the failure of our governments to prepare for the inevitable rainy day.

Since the 1980s, Jersey has paid budget surpluses into a long-term savings account. This Strategic Reserve currently holds £500 million (CI$672 million). In addition, Jersey introduced a Stabilisation Fund (effectively a second savings account). The government has used this to put money aside in periods of growth, which is now being used to support the economy through the current downturn.

How nice it would be if we had such an economic cushion to soften the hard blows we are currently experiencing.

Even before the current economic crisis, Jersey had already modernised and broadened its taxation system – the very thing we are now being forced to do by force of circumstances as well as instructions from the Foreign and Commonwealth Office. A three percent Goods and Services Tax and a ten percent tax for financial institutions were introduced in 2008.

Here, every time any kind of tax or other levy was suggested on financial institutions, there was an outcry that it would drive business away. Clearly, Jersey has done so and prospered nonetheless.

Jersey also introduced an independent Fiscal Policy Panel of leading economists to publicly advise the Treasury Minister and, according to Jersey Finance, this use of independent advice in setting fiscal policy has few parallels in other small jurisdictions, or even in larger economies. Perhaps, if not too late, this is something that might usefully be adopted here.

Furthermore, both Jersey and Guernsey impose personal income taxes at a standard rate of 20 percent on worldwide income but, again, have prospered as financial centres notwithstanding the imposition of income tax.

Indeed, many years ago, when Jersey enacted a requirement that new (non-working) residents must pay a minimum of £200,000 a year in income tax, Jersey residency suddenly became the latest status symbol among the rich who felt they had something to prove, because it was de facto evidence that one had an annual income of at least £1 million.

Thus, Jersey in particular is an example of how a small island financial centre can not only co-exist but prosper with personal income taxes, a goods and services (sales) tax and a tax on financial institutions. This needs to be borne in mind whenever someone says this would not work for the Cayman Islands.

In fact, there has been a lot of talk about increasing public revenue in order to keep this country afloat but no one it seems wants to talk about imposing any kind of direct taxation – even though that seems to be the inescapable outcome of the current dire situation.

Surely, there is scope for raising import duties – selectively or across the board. This is also an opportunity to tax the unnecessary social phenomenon of large gas-guzzling vehicles on such a small island, as well as the propensity for each family to own three or four vehicles. Such luxuries, we suggest, should in future have to be paid for at a higher level than hitherto by those that insist on enjoying them.

Perhaps the Japanese “deportees” should also be subject to a higher rate of duty to level the playing field for local car dealers.

It seems to us that there is quite a lot of scope for increasing government revenue but some political resolve is needed to do so – which has been conspicuous by its absence in recent official pronouncements.

Whether it is property taxes, increased import duties, a luxury tax of some description, a tax on financial institutions, a sales/value added tax or, horror of horrors, a modest income tax, something will have to be done as a direct measure.

A vague expectation of trickle down economic benefits did not work for the previous government and it will not work for this one.