Jeremy Hobson: When I think Cayman Islands, I think of beaches, island breezes, and tax havens. The British territory has $91,000 registered companies, including 235 banks. But now, because of pressure to plug a budget hole, the government is proposing a 10 percent income tax on foreign workers.
Anthony Travers is chairman of the Cayman Islands Stock Exchange and he joins us now. Good morning.
Anthony Travers: Good morning.
Hobson: So how long have you been living and working in the Cayman Islands?
Travers: Thirty-seven years, I’m happy to say.
Hobson: That sounds pretty nice. And how have things changed since then, if at all?
Travers: Well, dramatically. When I came here, there were no roads, no newspapers, no television, no radio. And now it’s the fifth largest financial center in the world. So we believe in the tax-free structure here. The Cayman Islands is probably the last bastion of free capitalism.
Hobson: OK, so, as you understand it, who is this new tax going to hit?
Travers: If it were enacted, the proposal is that it only applies to foreign workers in the Cayman Islands.
Hobson: These are just people working there — not somebody who has an account there or who is running their business there — they actually have to be working there.
Travers: That’s correct. It certainly doesn’t apply to investors or any of the financial industry. It’s people who are residents on the island who Caymanian — that is to say, the ex-patriot workers.
Hobson: OK, so what’s wrong with that? Why shouldn’t the government do that to try to fill a budget hole?
Travers: Well, I think the firestorm of negativity that’s been caused here comes about because for 200 years, the Cayman Islands has never had any form of direct taxation on anyone resident on the island — so it is a major change.
Hobson: But where do you think businesses or people are going to go if this tax goes into effect? I mean, there’s not a place, really, that exists that is going to have a competitive tax situation, even if they put in this 10 percent tax, right?
Travers: I think the concern is that this is seen as a thin end of a wedge. The pressure on this is coming from the British government, not the Cayman Islands government. And I think what they want to see is higher taxes generally, and the feeling is that if taxes are introduced here — any form of direct tax — rates will only go up.
Hobson: Anthony Travers, chairman of the Cayman Islands Stock Exchange. Thanks so much.
Travers: Thank you.
Marketplace is on a mission.
We believe Main Street matters as much as Wall Street, economic news is made relevant and real through human stories, and a touch of humor helps enliven topics you might typically find…well, dull.
Through the signature style that only Marketplace can deliver, we’re on a mission to raise the economic intelligence of the country—but we don’t do it alone. We count on listeners and readers like you to keep this public service free and accessible to all. Will you become a partner in our mission today?