April 21, 2021

The Editor Speaks: The budget makes things a little brighter

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Colin WilsonwebCayman’s Minister of Finance, Marco Archer, presented his 2014/15 Budget in the Legislative Assembly on Monday (26) and made things a little brighter for all of us.

The main bright note was the reduction of 25 cents per gallon on diesel fuel that should mean a reduction on our electricity bills of around 4%. I say should but you never know with CUC.

There were also breaks for businesses with a reduction in general duty of 2% on all goods for licensed retail traders that the minister said would help merchants cut their prices and encourage people to buy local. We will see how many of these traders actually pass this on!

There are also going to be some “significant cuts in the cost of trade and business licenses for small business in the districts.” There is also included a provision for payment in installments across the year.

The Premier, Alden McLaughlin, was optimistic in his policy statement that preceded the Budget Address when he gave us a taste of what was to come before Archer provided us with the details.

It is nice that we have an accountant that actually looks behind the picture. He admitted that Government would be losing some income but he thinks, and I agree with him, it could trigger an increase in spending therefore making up for the lost revenue.

The only way out of a recession according to the economics subject I studied many years ago was to actually cut and not increase as you have to stimulate not detract. History shows that what you expect to bring in by revenues from an increase is nothing like what you think.

It has amazed me over the years how many of our big corporations, including banks, don’t practice the economics mandate they must have studied.

Obviously Mr. Archer has.

Any country that has a shrinking middleclass is in problems.

The minister is forecasting the country will exceed the government forecast of $100M by $7M and that, if it happens, will be an amazing feat. The operating surplus forecast for 2014/15 is estimated at $128M for the entire public sector.

To achieve this government will be making even more strict controls on public spending and enhanced debt collecting.

Because the economy is beginning to turn around import duties had increased more than originally predicted.

However, there were some bad trends. The Cayman Turtle Farm has an operating loss and debt of a staggering $9.8M and Cayman Airways lost $4.8M. It was not good news over at the National Housing Development Trust that had debts of $2.8M and the Development Bank had debts of $1.5M.

Government also is bringing down debt by $25M and is providing a shrinking fund that they will pay into over the next four years starting with $4.3M this year.

There was also good news for our civil servants. The premier announced they will receive a one time bonus of 2.5% gratuity payment based on government workers’ annual salaries. It will be in their pay packets next month.

He made it clear the gratuity payment applies only to central government workers. He made it clear it will not apply to MLAs!

And last but not least we have just heard government has eliminated “a duty charge on visitors travelling with wedding attire to the Cayman Islands.”

Yes, things are a little brighter.

 

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