Premier McKeeva Bush was expected to mount a public meeting last evening to further explain his government's decision to impose a 10 per cent payroll tax on non-nationals working in the Cayman Islands.
The tax, called a Com-munity Enhancement Fee, will only be applied to work-permit holders earning more than $20, 000 KYD (US$23,860) per year.
Permanent residents, non-Caymanian government contract holders and Caymanians are exempt from the tax.
In a national address last week, Bush regretted the decision but insisted that his government's hands were tied since United Kingdom officials have been demanding a sustainable budget.
"The Foreign and Commonwealth Office insisted that the government strengthen its fiscal position by implementing a greater level of expenditure reductions than had hitherto been made by honourable ministers and senior civil servants. The concern is to make expenditures more sustainable going forward into future fiscal years," he said.
RANGE OF OPTIONS
Bush added that his administration had a range of taxation options to consider but it decided on the payroll tax.
"We could have introduced income tax, property tax, value added tax or something softer such as the Community Enhancement Fee," he said.
"Government has opted to introduce a Community Enhancement Fee that is linked to the remuneration level received by work-permit holders in the Cayman Islands," said Bush.
The proposed tax has been strongly resisted by Opposition Leader Alden McLaughlin who described it as bad move which could severely hamper business in the Cayman Islands and possibly be extended to Caymanians eventually.
"Once we go down that road, it's only a matter of time before it expands. This is something no one in Cayman ever wanted to contemplate," he said.
McLaughlin further suggested that the government's decision to target work-permit holders is a political move.
"I can only presume that the reason why only work-permit holders have been targeted is because we are 10 months out from a general election and that is the category of persons who aren't able to vote," he said.
In response, Bush blasted McLaughlin for misleading the public by suggesting that the proposed 10 per cent tax could be extended to Caymanians.
"I rejected the value added tax, income and property tax and payroll taxes across the board in 2009 - I still do," he said. "[Mr. McLaughlin's] suggestion is nothing but him trying to gain points from this situation," the premier said.
There are reports that a group of more than 200 people was preparing to mount a peaceful protest against the tax ahead of the premier's event.