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Threats to Caymans tax haven cause social unrest in paradise
| Published: | 18 Oct at 6 PM |
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A favourite destination for expats from across the world, the Cayman Islands’ reputation as a modern paradise is being threatened by the erosion of its tax-free status.
Warm, azure seas, perfect white-sand beaches, a friendly, international offshore community and most importantly, a tax haven, the Cayman Islands chain is traditionally regarded as paradise on earth for those wealthy enough to be able to be residents. However, during the last decade, the expat community has noted a change in local peoples’ attitudes, with the change now being accentuated by moves towards an end to its famous tax-free status.
The offshore financial services industry, the mainstay of the economy for many years, is now threatened by the USA’s FATCA programme as well as by the G5 exchange information treaty. Experts in the field believe pressure from abroad for compliance with the two programmes will eventually result in most financial companies moving elsewhere or simply closing down, leaving the archipelago reliant on tourism.
In the meantime, present-day youth on the island are becoming far less pro-British than are their parents, and are blaming the increasing expat community for the lack of opportunity as regards jobs. Tensions between expat workers and young Caymanians have been growing since a devastating hurricane hit the islands in 2004, followed by a government policy which resulted in many long-term expats having to leave.
Since then, unemployment has risen, as has the crime rate, and cultural and generation gaps are now the order of the day. Should the financial services industry be forced to move out and on, an expanded tourism industry may well produce more jobs, but will also result in unpopular development, even more pronounced social upheaval and the total destruction of what is left of the islands’ unique appeal.
Warm, azure seas, perfect white-sand beaches, a friendly, international offshore community and most importantly, a tax haven, the Cayman Islands chain is traditionally regarded as paradise on earth for those wealthy enough to be able to be residents. However, during the last decade, the expat community has noted a change in local peoples’ attitudes, with the change now being accentuated by moves towards an end to its famous tax-free status.
The offshore financial services industry, the mainstay of the economy for many years, is now threatened by the USA’s FATCA programme as well as by the G5 exchange information treaty. Experts in the field believe pressure from abroad for compliance with the two programmes will eventually result in most financial companies moving elsewhere or simply closing down, leaving the archipelago reliant on tourism.
In the meantime, present-day youth on the island are becoming far less pro-British than are their parents, and are blaming the increasing expat community for the lack of opportunity as regards jobs. Tensions between expat workers and young Caymanians have been growing since a devastating hurricane hit the islands in 2004, followed by a government policy which resulted in many long-term expats having to leave.
Since then, unemployment has risen, as has the crime rate, and cultural and generation gaps are now the order of the day. Should the financial services industry be forced to move out and on, an expanded tourism industry may well produce more jobs, but will also result in unpopular development, even more pronounced social upheaval and the total destruction of what is left of the islands’ unique appeal.
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