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Government has rejected property taxes – as well as income, payroll and sales taxes – to address its budget deficit, but will sell George Town’s sewer system and seek private financing for a range of infrastructure projects.

The investments would generate quick cash for government, provide employment and offer long-term returns, attacking the $81.1 million operating deficit, according to Leader of Government Business, Hon McKeeva Bush.

“Over the last two weeks, discussions have intensified with a cross-section of the financial services industry. We are making final decisions on the ‘09/’10 budget,” Mr Bush said, speaking Thursday morning at a post-Cabinet press briefing, which was carried radio and television.

“Various suggestions of ways to enhance the country’s revenue base” had surfaced, he said, since the 27 August ‘economic forum’ at the Ritz-Carlton Grand Cayman, “mainly a property tax and an income tax.”

“We have decided not to go this route because it would change the island’s economic base, and so we won’t pursue these two suggestions,” he said.

Addressing other suggestions for direct taxation, Mr Bush said “no positions have been put forward” as regards a payroll tax: “We can get sustainable revenues from existing sources,” he said, while he explicitly rejected a sales tax.

“That’s a VAT [value-added tax], and no, there will be no VAT,” he told the audience.

Reacting later, former Chairman of the Cayman Islands Monetary Authority and local financial commentator Tim Ridley expressed disappointment with the decision. The former managing partner at Maples & Calder had personally advocated property taxes as a sustainable source of revenue, dubbing it a “community services charge”.

“I am not surprised that the community service charge received so much pushback,” he said. “No one likes the idea of having to write more cheques to the government.”

“I shall be interested to hear how government intends to address the short- and long-term revenue and expenditure issues that have received such a welcome public airing over the past week or so. I shall defer further comment until then,” he said.

Instead of taxes, Mr Bush said, he would invite the private-sector participation in official infrastructure projects.

“The Government will invite strategic partners to participate in government functions,” he said, “like selling the sewerage system, with the right expand it.”

“We will seek a public-private partnership for roadways, highways, a cruise-ship port, a cargo port, a new airport and to handle municipal solid waste,” he said. “There is no time for long-term plans. We have to do some of these things now. We have to start. These initiatives will lead to significant employment,” he said, pegging potential cash injection at $700 million, and the downstream ‘multiplier effect’ at “three times that amount”.

He said he was still waiting for a response, however, to his standing offer to privatise the Cayman Turtle Farm and Cayman Airways. “I have [offered them] before, and we are just waiting to see if anyone comes forward,” he said. “Cayman Airways, however, is a horse of a different colour”, requiring a particularly dynamic investor.

“Northward Prison is also something we’d like to divest,” he said. He also described potential creation of a yacht basin.

“Another development we are looking at is to enhance yacht capacity,” he said, suggesting a link, “less than one mile, to join various basins together if we clean and deepen the channel”, linking West Bay’s Morgan’s Harbour through the North Sound to Governor’s Harbour and Snug Harbour.

“This will generate revenues and jobs and help keep the standard of living we are used to,” he said. “We do not have the luxury of time. Government must promote an inward-investment policy. We must create a climate to get people to invest in these projects.”

“I have a number of entities interested in these projects,” Mr Bush claimed, “and within the coming week, the Government will finalise negotiations.”

“I will offer [projects] to the first one that offers us a viable programme,” he said, looking forward to creation of “those jobs, an additional revenue stream and the diversification of our economy with sustainable revenues.”

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