News from the Cayman Islands for
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Letter: Raising money without taxation
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| Published on Thursday, September 3, 2009 | Email To Friend Print Version
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Dear Sir,
Levying taxes as suggested by the British government will cause a mass migration of the geese which lay their golden eggs in Cayman.
Here is a possible alternative. There is a multi-billion-dollar hedge fund industry in the Cayman Islands. Encourage the managers of those funds to do what they do best: invest. Only this time invest in Cayman.
As a requirement of doing business in Cayman, perhaps one tenth of one percent of any fund should be invested in ten-year zero-coupon Cayman Island government bonds offering a reasonable rate of interest. That should produce enough money to solve the present cash-flow crisis, and pay off substantial debts too. It would buy time to fix underlying problems.
And it might just turn out to be the best investment they ever made.
Dr Charles H. Reid | | | | Reads : 1239 |
| Comments: |
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Martin Henry:
Sir, having just read the article regarding the Cayman Government being insolvent; I thought I would put my two pennies worth in having both lived and worked in the Cayman Islands for two years.
The Cayman Islands certainly missed a trick over the years and perhaps should have followed the route taken by a former British colony; Hong Kong. As the Cayman Islands are a non-producer of any goods, and relies on banking and tourism; any downturn was always going to hit the islands hard, as reliance on all of those areas is a model for long term failure.
The Cayman Islands should have become a more business friendly place to come. Current rules on part Caymanian ownership of companies is a barrier to new businesses coming to the islands. The islands should have attempted to tempt other forms of industry, such as call centres, corporate headquarters, insurance, and investment groups to name a few. It is a stark fact that the current rate of development on the islands is pushing the Cayman Islands further down the list of tourist destinations, and once Cuba opens up, (which will be cheaper and certainly more tourist focused; and dare I say more interesting), tourist numbers will continue to decline.
With restrictive policies on inward investment, I fear the Cayman Islands have had their best days as the world has moved on. A couple of pretty beeches are not going to sustain the people of the Cayman Islands; nor will the continued restrictive policies aimed at foreigners looking to live and do business there.
If the Cayman Islands fail to be a business friendly place to invest, its decline is assured and with it will come the exit of its current foreign businesses and individual investors. The native population can only sell so much of their land for housing and with investors looking elsewhere at better opportunities, the value of real estate on the islands is also going to continue to fall. |
| Harry Phinizy:
I like the idea; but has the government addressed the issues of their spending?
Any business has to cut overhead and address all expenses in a recession. Has the government done this? Is the new government building using solar power? We must all conserve in tough economic times; this includes government spending. Look at productivity and spending first, and then taxes are an option. |
| Joe Cayman:
As a very frequent visitor for the last 35 years, I believe that Mr Henry has it right; tax the Hedge Fund industry. In addition; why not make the big developers pay a premium for the lavish estates they create on the island and benefit from? |
| Colin Forster:
Firstly, an investment manager is answerable to his shareholders and is thus mandated to maximize their return on investment. He/she will look at an investment in Cayman logically and dispassionately. Furthermore; considering current volatility, there are far safer havens for fixed income securities offering similar rates. I can only see it hindering an already strained fund growth rate. Protectionist policies are not necessarily what the islands need right now. We must strike that balance which allows foreign direct investment to be tapped while ensuring the local populace has a sustainable means of living. |
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