Tax threshold may go to $30k
(CNS): According to government sources, it is likely to be the country’s immigration department that will collect the expat tax proposed by the premier, though it is not clear how. CNS also understands that government could be rethinking the level of pay at which the 10% tax on the earnings of foreign workers could kick in, raising the starting point to salaries above $30,000 and not the $20,000 that Premier McKeeva Bush had said when he first announced the controversial move last week. However, sources tell CNS that the only thing that appears to be certain is the uncertainty surrounding this tax and the current budget situation for government’s 2012/13 spending plans.
Bush is scheduled to meet with the public Wednesday evening, at which time, he has said, he will offer more details on what he has called a “community enhancement fee”, which is, in reality, a form of income tax of work permit holders. During a radio broadcast to the nation he suggested this tax would be 10% of the earnings of all work permit holders earning $20,000 or more, but those employees, as well as their employers, would no longer have to make a contribution to their pensions.
Since that announcement, the idea has received criticism from every corner of the private sector but gained what appears to be very limited support from Caymanians. The outrage of large sections of the community has been reflected mostly on Facebook and in the online media, where the vast majority of commenters, particularly on Cayman News Service, have made it clear that they do not support the tax.
Many locals believe that the imposition of direct taxation, once implemented, is unlikely to remain confined to expatriates and that it would represent a fundamental shift in Cayman’s economic fortunes.
The collection of the tax has also been slated across the island, not least by those in the offshore sector, who have pointed out that even before government has even established a secure mode of getting the revenue in, experts here will have created myriad financial vehicles to help workers avoid the tax.
The suggestion that immigration will be charged with collecting the fee suggests that it would be linked to work permits, which may means the tax will have to be paid annually, creating particular hardship for lower paid employees, or that the department will need to create a new enforcement arm to collect on a more regular basis.
It is not yet clear how immigration would check that the salary figure an employer says he is paying an employee is correct.
Check back to CNS later tonight for the latest news on the controversial expat tax.
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