In an unusually critical, not to say courageous, letter written to the Leader of Government Business, Hon. McKeeva Bush, by Carlos de Serpa Pimentel, the chairman of the Society of Trust and Estate Practitioners in the Cayman Islands (STEP), the government has been taken to task in no small way for its handling of the current economic crisis, especially in relation to its impact on the financial services sector.

One is tempted to suggest that fools rush in where angels fear to tread, but Mr Pimentel is clearly no fool. In fact, much of what he says on behalf of STEP has been pointed out by us on many previous occasions.

It is, however, unusual for any financial sector professional or organisation to be so outspoken in their opposition to government policy, especially when it is well-known that Mr Bush in particular does not take such criticism kindly.

Perhaps this is a sign of the dire straits the country and especially our financial sector finds itself in, but, in any event, the contribution to raising the profile of what should have been from the outset a vigorous debate on the impact of the recent budget proposals is to be welcomed.

According to the report commissioned and released by the financial sector earlier this year, the financial services industry contributes 55 percent of our gross domestic product (GDP).

Leaving aside our own often-expressed opinion for the moment that the finance sector itself has been slow to head off and/or adapt to easily foreseeable adverse circumstances, it is certainly fair to say that at least one economic imperative for the government should be to “revive” (as Mr Pimentel puts it) the financial industry, not put it under further stress and risk.

One could say the same thing about the small business sector in general, which has been labouring for too long under the burden of an almost unbearable liquidity squeeze, not only uncorrected by the government but greatly exacerbated by the public sector’s failure to pay its own bills to the private sector.

Moreover, this pre-existing financial stress on the critical small business sector is now to be increased by ill-conceived taxes that will hit struggling small businesses and lower-paid workers the hardest.

In this context, the fact that STEP’s letter also took issue with the proposed Business Premises Fee is interesting. What may not be universally appreciated by the general public is that most of the large financial institutions occupying prestigious buildings in George Town do so as tenants, not owners, and the proposed 10 percent increase in their rent, courtesy of the Business Premises Fee, is apparently of some concern to the financial sector.

If this tax is troubling for the well-off financial firms, how much more problematic is it going to be for other local businesses that are already struggling to survive?

And, in case Mr Pimentel hasn’t already realised it, the response to his remark, “If business premises are to be taxed, we do not understand why this should be restricted to those which are leased,” is that significant business property ownership here is largely in the hands of politically and financially influential Caymanians – a constituency that this or any other government will be extremely wary of upsetting.

Although STEP, in its letter, calls on the government to make it absolutely clear that it will not accept any proposal concerning direct taxation that will adversely affect the financial industry, as we have pointed out before, the issue has already been allowed to slip out of the government’s control by virtue of the agreement to set up and adopt the recommendations of an independent committee on direct taxation.

If such committee recommends the imposition of property and/or payroll taxes, it is not going to go down too well with Britain if we renege on our agreement to abide by its recommendations, no matter what the government of the day (or STEP, for that matter) may want.

On other aspects, however, Mr Pimentel is right on point. First, that the government appears to be doing little to tackle the other side of the revenue/expenditure equation, namely, reduce operating expenses and, secondly, that the increase in violent crime in Grand Cayman could prove as damaging, if not more damaging to the financial sector as the new and increased taxation – something we pointed out just last week.

In any event, once again, kudos to Mr Pimentel and his colleagues for having the courage to speak out. Time will tell whether or not their timely observations will be taken onboard by our generally autocratic and stubborn political leadership.